Medium Term Fiscal Strategy 2012-2015

HELLENIC REPUBLIC
MINISTRY OF FINANCE
Medium Term
Fiscal Strategy
2012-2015
ATHENS, JUNE 2011
1
MTFS REPORT TO DRAFT LAW
«MEDIUM TERM FISCAL STRATEGY 2012-2015»
Table of contents
Chapter 1
Greece is changing. The national plan of restructuring for a creative Greece.
From crisis and deficits to development and social justice.................................
4
1.
Facing the crisis: The first steps to save and reform the country ...
4
2.
Greece is changing: Converting crisis into an opportunity..............
2.1
2.1.1
2.1.2
2.1.3
2.1.4
5
5
6
7
8
2.1.6
2.2
2.2.1
2.2.2
2.3
2.3.1
2.3.2
2.3.3
2.3.4
2.4
2.5
From recession to growth ............................................................................................................
A new growth direction for the country .......................................................................................
Rural growth .................................................................................................................................
Liberating the forces of growth ....................................................................................................
Human resources as a factor in accelerating progress towards the future: Investment in
education, knowledge and innovation.........................................................................................
DEKO’s (Public Utilities and State Organizations) that do produce services but don’t produce
deficits...........................................................................................................................................
Public assets as a tool for growth, competitiveness, employment............................................
For a cohesive and protective society.........................................................................................
Health services with quality and dignity for citizens ...................................................................
Employment, social insurance, combating poverty
State – public administration – institutions – justice...................................................................
Introduction...................................................................................................................................
Public Administration ...................................................................................................................
Justice...........................................................................................................................................
Political system and Constitution ................................................................................................
Our position in the word...............................................................................................................
From deficits to surpluses............................................................................................................
3.
Epilogue ....................................................................................................
22
Chapter 2
Basic assumptions of MTFS and baseline scenario 2011 ....................................
23
2.1.5
1.
2.
Presentation of the Medium Term Fiscal Strategy (MTFS).................
The economy............................................................................................
2.1
2.2
Recent developments ..................................................................................................................
Medium term prospects ...............................................................................................................
3.
Medium Term Fiscal Strategy: Fiscal issues and risks ......................
3.1
3.2
3.3
3.3.1
3.3.2
Introduction...................................................................................................................................
Fiscal Management issues in the Greek Economy....................................................................
Macroeconomic and Fiscal Risks for the MTFS.........................................................................
Macroeconomic risks ...................................................................................................................
Fiscal risks....................................................................................................................................
10
11
11
15
15
16
17
17
17
18
19
20
20
23
26
26
27
29
29
29
29
29
30
2
3.3.3 Public Debt: evolution and servicing costs ................................................................................
3.3.4 Privatization and state assets management programs..............................................................
4.
Baseline scenario ....................................................................................
4.1
4.2
4.2.1
4.2.2
4.3
4.3.1
4.3.2
4.4
4.5
4.5.1
General introduction.....................................................................................................................
Comparative analysis of budget and actual data for the period 2009-2010.............................
Fiscal year 2009...........................................................................................................................
Fiscal outcome of the year 2010 .................................................................................................
Baseline scenario.........................................................................................................................
Basic macroeconomic assumptions............................................................................................
Assumptions for the wage bill projections of the General Government....................................
Fiscal adjustment measures that have been taken into account for the baseline scenario ....
Baseline scenario for the period 2011-2015...............................................................................
Comparison of budgeted aggregates and estimates for the year 2011....................................
31
32
33
33
33
33
34
36
36
36
38
38
41
Κεφάλαιο 3
The Medium Term Fiscal Strategy............................................................................
44
1
Fiscal strategy and Policies ...................................................................
1.1
1.2
1.3
1.4
1.4.1
1.4.2
1.4.3
1.4.4
1.4.5
1.4.6
1.4.7
1.4.8
1.4.9
1.4.10
1.5
Controlling and retaining the increasing trend of the debt .........................................................
The fiscal consolidation ...............................................................................................................
The creation of permanent and robust growth conditions ........................................................
The management of the property of the Greek Public Sector - privatizations..........................
Policy Overview for State Asset Management 2011-2015 ........................................................
Infrastructure and transports ......................................................................................................
Ports..............................................................................................................................................
Urban Water and Sewage Management ....................................................................................
Gaming .........................................................................................................................................
Energy...........................................................................................................................................
Telecoms and Post ......................................................................................................................
Defence Industries .......................................................................................................................
Banking Sector .............................................................................................................................
Metals and Mining ........................................................................................................................
Real Estate Property....................................................................................................................
2.
3.
Medium Term Fiscal Strategy 2011-2015..............................................
Goals for revenues and expenditure.....................................................
3.1
Main policy measures with fiscal implications on the 2012 budget...........................................
4.
5.
Total revenues and expenditure of the General Government............
Expenditure and revenues of the General Government per sector ..
5.1
5.2
5.3
State Owned Enterprises (SOEs) ...............................................................................................
Local Government........................................................................................................................
Extra-budgetary Funds (EBFs)....................................................................................................
6.
State budget expenditure per ministry .................................................
6.1
6.2
6.2.1
6.2.2
6.2.3
State budget expenditure per ministry – After measures ..........................................................
Public Investment Budget – Action plan for PIB for the period 2011-2015 ..............................
Objectives served by the Public Investment Budget..................................................................
Monitoring – assessment – actions ............................................................................................
Consistency with fiscal capacities ...............................................................................................
7.
State budget expenditure per major category .....................................
7.1
7.1.1
7.1.2
7.1.3
7.1.4
7.1.5
7.1.6
State budget expenditure per category – Baseline scenario.....................................................
Salaries, pensions and other remuneration benefits..................................................................
Social Security, Medical Care and Social Protection.................................................................
Grants, operational and other consumption expenditure...........................................................
Reserve fund and other non allocated expenditure ...................................................................
Interest expenditure .....................................................................................................................
Expenditures for military equipment programs of the Ministry of National Defence ................
44
44
45
46
48
48
50
51
52
52
53
54
55
55
56
57
62
66
70
71
74
74
75
77
79
79
90
90
90
91
93
93
93
93
94
94
94
94
3
7.2
7.2.1
7.2.2
7.2.3
7.2.4.
7.2.5
7.2.6
7.2.7
7.2.8
7.3
State budget expenditure per category – after interventions.....................................................
Salaries, pensions and other fringe benefits ..............................................................................
Insurance, healthcare and social protection...............................................................................
Grants, operational and other consumption expenditure...........................................................
Earmarked spending....................................................................................................................
Reserve fund and other non-allocated expenditure...................................................................
Interest expenditure .....................................................................................................................
Expenditure for the military procurement programs of the Ministry of National Defence ........
Expenditure for guarantees called .............................................................................................
Transfers for the state budget to general government bodies ..................................................
8.
Social budget ...........................................................................................
97
98
98
99
100
100
100
101
101
101
103
4
CHAPTER 1
GREECE IS CHANGING.
THE NATIONAL PLAN OF RESTRUCTURING FOR A CREATIVE GREECE.
FROM CRISIS AND DEFICITS TO DEVELOPMENT AND SOCIAL JUSTICE.
1.
FACING THE CRISIS: THE FIRST STEPS TO SAVE AND REFORM THE COUNTRY
Since the end of 2009, our country has been facing the biggest crisis in its recent history. The chronic pathologies and
fiscal instabilities together with phenomena of strong lack of credibility in relation to the real fiscal situation of the
country, combined with an environment of unprecedented uncertainty in the international banking system, have
contributed to the gradual exclusion of Greece from the international markets and the inability to serve the borrowing
needs of the country.
Securing financing via a loan of 110 bn euro from the euro zone countries and the International Monetary Fund in the
framework of the Greece Support Mechanism, with the participation of the European Central Bank, has allowed our
country to avoid moratorium which would have pernicious national, financial and social consequences. The mechanism
has ensured a period of absence from the markets, so as to allow the implementation of an ambitious program of
structural changes and fiscal adjustment for the permanent solution of the causes of the problems Greece faces.
This time credit is not left to be lost. An unprecedented program of big changes is already under implementation:
 Reducing deficit in 2010 by 12 bn euro or 5 GDP points
 New social security system
 An effective state with “Kallikrates”
 Total implementation of the principle of transparency
 Opening up many closed professions to create more employment opportunities
 Improving the business environment to create a friendly environment for new investments and new labor posts
 Reform of the tax mechanism and systematic fight against tax evasion
 Rationalization of the health system
 Creation of a new school, a new university for the future generations that will be in charge of the fortune of the
country
 Changes in our institutions and justice, participation of the citizens in the formulation of the decisions
influencing them and for their more effective protection.
The country is already in an orbit of big structural changes but also in the course of a radical reduction of deficits, in
order to hold and then reduce public debt. Through this course, Greek economy will regain credibility. Respecting the
national commitments enhances credibility, prestige and bargaining position of the country.
On this road and by implementing a National Restructuring Plan, Greece is aiming not only at facing the multilateral
crisis the country is going through today, but also to transform it to a chance by attempting the biggest jump ever
performed by our country to the future. This a the goal of the National Restructuring Plan, integral part of which is the
Medium Term Fiscal Strategy, which will create the conditions which will allow to continue at high speed the big
reforms which are necessary for the Greece we are visioning, the Greece of creation.
5
2.
GREECE IS CHANGING: CONVERTING CRISIS INTO AN OPPORTUNITY
2.1
From recession to growth
Greece possesses a huge potential, unique natural wealth and human resources and major comparative advantages.
However, it has come to be a country with weak production, of a non-competitive economy which is relying on loans,
and with widespread social injustice. A country that is economically, financially and socially unsustainable.
The course towards decline of recent years will be fully reversed with the big reforms we have begun to implement:
 To come out of the crisis in a sustainable way,
 to move from a country that consumes on loan to a country that creates and produces,
 to create new jobs,
 to generate new income that will be shared equitably:
1.
2.
3.
we radically change the development directions of the country in order to utilize our major comparative
advantages,
we break the shackles of any obstacle, any bureaucratic, unnecessary procedure that leads to lack of
transparency, delays, corruption, unreasonable costs, that ultimately keeps the creative forces of the country
transfixed and condemns us to being less than we could be,
for the first time we are implementing a major program to exploit the huge movable and immovable state
property, to bring growth, to create new jobs, to bring investments and expertise, to provide new possibilities
and services to citizens.
The aim of all our development initiatives is to create as many jobs and employment opportunities as possible in the
private sector, as now the public sector can no longer be able to provide this and we do not want it to absorb
unemployment artificially on a nepotistic basis.
However, a prerequisite for growth is to strictly adhere to the effort for fiscal consolidation, so as to enhance the
credibility of our country, to regain the lost confidence, to improve the possibility for Greek businesses and our
banking system to raise funds, so as to increase liquidity in the real economy.
We have already begun a major reform program to bring growth in our country again.






With the opening up of closed professions and the liberalization of services that reduce the cost for citizens and
businesses.
With a new institutional framework to accelerate large investment.
With new financial tools, such as the investment law and E.T.E.A.N. (National Fund for Business and
Development).
With a radical simplification of the process to establish a business.
With the proliferation of electronic services provided by the state.
With the reduction of tax rates on invested profits of enterprises, and targeted incentives for new businesses, the
retention of jobs, the development of research and technology.
The first tentative signs of the recession weakening are already visible:
 The country’s exports have significantly increased.
 There is an improvement in the rural balance.
 This year, a rise in tourism revenues is expected.
All our policies, those we are implementing and those we will implement, are aimed at achieving this year the big
target: that 2011 will be the last recession year.
To create the conditions so that in 2012 we can enter again on a track of growth, with investments, increase of jobs,
boost of income.
2.1.1
A new growth direction for the country
We are changing the growth model of the country and turn to the utilization of our major comparative advantages.
6
A growth which will be based on the strengths as well as on the specific identity of development of each region in the
country.
Utilizing a potential that was delayed or under pressure from centralization and nepotism.
We focus on green growth, investment in knowledge and innovation and investment in people, through knowledge and
innovation.
We are changing direction in the sector of energy, to utilize the free energy resources which are abundant in our
country: wind and solar power.














For this reason, we are implementing an ambitious program that will significantly increase the share of Renewable
Energy Sources in the energy balance of the country, and also bring in investments of 40 billion euro and many
new jobs.
We drastically simplified the institutional framework for renewable energy sources so that investments can be done
quicker and simpler.
We have implemented an innovative program to save energy at household residencies to reduce the environmental
burden of household consumption, to encourage investments and the development of expertise in this sector, to
stimulate economic activity in the construction sector, to create new jobs, and also to significantly reduce the
household expenditure on energy costs in the medium term.
We are preparing the post-lignite period and for this reason we have undertaken the creation of one of the country’s
biggest photovoltaic plants in a deserted lignite plane in the region of Kozani.
We are gradually preparing to liberalize the energy market with the aim to boost competitiveness, realise
investments and create new jobs and provide better services to citizens and businesses
For the first time ever, we have published forest maps to effectively protect forests and also to stop the ambiguity
regarding which areas are categorized as forest areas.
We are rapidly progressing with the completion of urban planning to remove ambiguities, to protect the
environment and to liberate productive and creative forces.
We will soon begin a large open dialogue with civil society, social partners and also the Judiciary so as to draw a
red line with the past on the issue of illegal building.
We are ppromoting quality tourism both at the level of investments needed to diversify and develop special forms
of tourism to extend the tourist season, and by relocating our country on the world tourist map through use of the
most modern promotion methods and new media to advertise our tourist destinations, through the Internet, and also
through attendance at international exhibitions.
We opened up new possibilities for the development of tourism in the country by lifting cabotage.
We simplify the process of licensing tourism enterprises.
We simplify the procedures for the issuing of visas to countries of special interest, such as China and Russia, which
are major emerging markets.
We are moving to a new classification system of hotel units to ensure high quality of services and clear information
to tourists.
We extend the opening hours of archaeological sites.
We finally put an end to the depreciation of the former airport site in Helliniko, which has been abandoned for 10
years, and move rapidly into one of the largest investments ever made in our country that will ensure:




Thousands of new jobs, during the construction and also during the operation of the project.
The creation of one of the largest urban parks in Europe.
The development of various activities and high quality services that will increase the options and upgrade the
quality of life for millions of inhabitants.
An attraction of international repute - a symbol of modern Greece, the quality and excellence that we want to
highlight.
We also move ahead with large-scale landscape re-shaping that can change the picture of the Attica region, such as in
the area of Faliro.
7
2.1.2
Rural growth
Greek agriculture plays a significant role in the effort to come out of the crisis, but also in the creation of a sustainable
and green economy. Greek agriculture is able of producing internationally recognized produce of unique quality and
variety. Nevertheless, through a policy which for decades was marked by mismanagement, reliance on grants,
defensive approach, abuse of the environment was thus ultimately led it into decline.
Our goal is not simply to arrest the decline but to actually achieve a complete overthrow of the status quo. After
decades of depreciation we want an agriculture that produces produce of high quality and nutritional value that will
earn its place on the international markets.
Our target is for the export – import balance of agricultural products to be positive by 2013, the year when the current
C.A.P. is ending. Already in 2010, we achieved a reduction of the negative balance by more than 20%.
A key element of our policy is the promotion of the Greek and Mediterranean diet as a key competitive advantage of
Greek agriculture, and the agro-food identity of each region through its interaction with culture, tourism, natural
environment.
For this reason:
 We are forming in each region the “basket of local products” that supports the key export products, through an
Operational Program in each region of the country.
 We focus everywhere on innovation, promotion and standardization of quality products, the efficient organization
of exports and the opening up of new markets.
 We are taking practical measures to upgrade human resources and to strengthen them with trained farmers.
 We unify and change the direction of institutions dealing with research, innovation, vocational training, education
and certification.
 We reform collective forms of organization of production, of cooperatives, producer groups and trade
organizations and of partnerships on a new business-oriented and productive basis.
 We proceed with the utilization of both public and private rural lands that until now have not been exploited, by
professional farmers, new farmers, cooperative organizations and producer groups.
 We change state control structures, so as to deal effectively with occasions of illegal “Greek” branding.
 We strengthen the negotiation power of farmers towards mediators, traders and agro-food processors through
partnerships, contract farming and auctions of agricultural products.
This big reform is also supported by the decentralization of decisions to the Regions, Regional Councils and
Municipalities.
2.1.3
Liberating the forces of growth
In the past, our country suffered an actual depreciation in all international competitiveness rankings, which led to it
being ranked in the last positions among O.E.C.D. countries and the E.U. regarding the investment environment. We
reached the 109th position, below all O.E.C.D. countries in the business environment rankings of the World Bank.
We want to deliver our country from this situation, by dealing, at last, with the chronic pathologies of an environment
that is hostile to creativity, entrepreneurship, innovation, the attraction of domestic investment with high added value
that raise income and create new jobs.
Our basic goal is the elimination of all obstacles hitherto keeping the creative forces of the country in confinement,
hampering the development and utilization of our comparative advantages, including:
 Bureaucracy and the meandering procedures for licensing, establishing and running businesses.
 Limited liquidity and lack of financial tools to support investments.
 Limited competitiveness on the market.
 The barriers and lack of a culture of openness and limited linkage with international markets.
Removing the obstacles for creativity and entrepreneurship
Our goal is to create an environment completely open and friendly to creativity and healthy entrepreneurship, by
removing all obstacles at all stages of developing a business.
8















We have already implemented a drastic simplification of the procedure for establishing a business, in one day, at a
one-stop shop and with reduced costs.
This effort will intensify and the goal is to eventually provide such services through the Internet.
Similarly, we are taking steps to also radically simplify the licensing of businesses (fast track also for small
investments), starting from manufacturing activities, technical professions as well as business parks.
The same will soon be made possible for procedures for professional licensing of individuals and personal
businesses as these services will be available through the Citizen Centers.
We have already gone ahead with the opening up of closed professions so as to remove unreasonable obstacles to
entrepreneurship, to strengthen competition and increase options for citizens and businesses, to improve the quality
of services and to create new opportunities for investment and employment.
Having benefited from the experience of the Olympic Games, we changed procedures to encourage faster
implementation of big investments (fast track), showing due respect to the environment but without unnecessary
bureaucracy.
We implement an integrated plan for better legislation and good regulation.
We proceed with changing the pre-bankruptcy process, to give a second chance to companies that, for whatever
reason, face economic weakness.
We started the implementation of the «Business Friendly Greece» action plan, to remove a variety of bureaucratic
obstacles for entrepreneurship.
We progress with radical simplification of procedures for environmental licensing, to achieve a more substantial
environmental protection as well as faster licensing of investments, which until now faced considerable delays due
to bureaucracy.
In 2012, we will abolish the Code of Books and Records, which has been a source of ambiguity, uncertainty,
arbitrariness and lack of transparency for years.
In 2012, we will codify and simplify tax legislation.
We will multiply electronic services for citizens and businesses.
We move towards the cooperation between and gradual integration of audit and enforcement procedures of the
state, to improve their effectiveness and to reduce the transactions of businesses with multiple government
agencies.
We change the rules for building permits, where citizens will take the responsibility to comply with existing
legislation and engineers and urban planning authorities are only keeping a punitive supervisory role.
Increase of liquidity and new financial tools
For the revitalization of the economy we designed a comprehensive package to boost investments, with public and
private funds, with a total budget of 10 billion euro.




We launched a new Investment Law, which changes funding conditions for private investments and introduces new
values, new procedures and new financial tools along the lines of a new development model for the country.
We created a new institution to enhance the liquidity of companies, the National Fund for Business and
Development (E.T.E.AN.). E.T.E.AN. will be activated by mid 2011 and will provide liquidity to enterprises
through revolving loans, guarantees and counter-guarantees, co-investment and participation, in cooperation with
financial institutions.
To boost liquidity in small and medium size businesses, by giving special emphasis to new entrepreneurs and
innovation, we have activated the JEREMIE European Program in cooperation with the European Investment
Fund.
The new digital platform “Start Up GREECE” promotes our policy to support young entrepreneurs in particular.
The main source of financing the economy is the banking system of our country, but its unhindered access to liquidity
was limited because of the fiscal situation. For this reason, the state provides guarantees for raising funds from the
European Central Bank, to maintain the ability of the banking system to finance the needs of the real economy.
We also encourage any initiative for restructuring the country’s banking system through merging and cooperation, to
improve the ability of the banking system to respond to current global conditions and also its ability to draw funds and
serve the needs of the real economy and of citizens.
9
Competition and prices
Incomplete and unfair competition leads to distortions in the market, to unreasonable prices and interferes with sound
entrepreneurship and the attraction of investments.
For this reason, we immediately move ahead with actions to strengthen and activate the Competition Commission and
also to reorganize the Market Supervision Agency and to establish a new Directorate for Market Conditions and
Competition Analysis.
To enhance competition on the market for the benefit of consumers:
 We have planned and are moving forward with the liberalization of wholesale trade and with changes in the
operation framework for the central markets of Athens and Thessalonica.
 We simplify and modernize the institutional framework of retail trade for the benefit of competition and the final
consumer.
The policy for the enhancement of competition in the market will in the medium term lead to containment and lowering
of price levels. Nevertheless, in order to achieve an immediate decrease in prices, we have promoted a policy of
voluntary de-escalation of prices which has already yielded results, and we proceed to the second phase with offers
from large companies (retailers and suppliers) and the expansion of this initiative to other sectors. The result of this
effort is that, despite increases in international commodity prices, we have managed to limit additional consumer
burden.
Extroversion
To facilitate exports, we modernize the law on foreign trade that existed since the 70’s.
In close cooperation with exporters associations (P.S.E., S.E.V.E., S.E.K.) we are specifically recording any
administrative obstacles and promote their removal.
We prepare solutions for the entire export chain of selected dynamic export sectors (food, building materials,
medicines, trade services, technology, energy).
We are designing the Single Window, which is a single (integrated) electronic system that allows for all information
associated with trade and commerce to be entered only once in order to meet all the institutional – legal requirements
for the import, export and transit of goods procedures.
2.1.4
Human resources as a factor in accelerating progress towards the future: Investment in education, knowledge and
innovation
The economy of knowledge and innovation cannot develop unless based on a contemporary educational system that
allows young people of all grades to develop their capabilities. An educational system that promotes the skills and
talents of pupils and students, that gets feeds by and into the society of knowledge, is supported by and also supports
development and competitiveness in the economy.
This entails the modernization of school facilities and wider use of new digital infrastructures, including gradual
introduction of digital books. For this purpose, we are in the process of completing an integrated Digital Educational
Platform that already includes 130 school textbooks, from all educational grades, and the aim is to eventually include
all school textbooks as well as additional interactive material.
It also means expanding the content of education. Hundreds of full-day primary schools are already implementing the
Integrated Restructured Educational Training Program, which includes enhanced foreign languages teaching,
computing, culture, physical education and promotes book reading.
In Higher Education, we promote initiatives that emphasize greater interdisciplinary application in curriculums, a clear
definition of the aims of T.E.I. (Technical Universities), which have operated in an unclear environment for 20 years,
and the autonomy and social accountability of institutes and organizations of higher education.
10
The operation of the Digital University reduces bureaucracy in studies, updates the digital educational material
provided and also significantly saves resources. The operation of the digital service “Evdoxos” has already reduced the
overspending for printed material by 40%.
Moreover, having educational needs as the main criterion we attempt save and rationalize the use of resources. In this
direction, we have already taken a big step by merging school facilities.
By rationalizing the operation of all grades of education we save resources amounting to 0.2% of GDP, while during
the period 2012-2015 about 2.5 billion euro will be invested in education.
The diffusion of innovation is also a critical tool to change the production model of the country, by utilizing the skills
of our young scientists. Greece performs well in international innovation competitions, research programs, inventions
and ideas, despite the fact that our research and innovation system remains one of the least dynamic in Europe.
Our goal is to encourage, to support and to promote the production of new knowledge and to turn it into a motivating
power for our economy. Research can and should also lead to concrete results for the economy and society. We support
innovation and research by radically changing the methods of evaluating and supporting research, but also through
linking, consultation and employment programs aimed at researchers. Already there are programs running, such as
“Zevxis” for the linking of our researchers with research and development networks abroad.
2.1.5
DEKO’s (Public Utilities and State Organizations) that do produce services but don’t produce deficits
Greek citizens are entitled to enjoy public services by state companies and organizations that operate tidily and with
transparency.
The role of public companies and organizations is being reassessed. Restructuring plans are implemented in all public
companies, starting with the most deficient, O.S.E. (Greek Railways) and O.A.S.A. (Athens Public Transport
Organization).
The personnel of public companies and organizations is reduced and transferred to public sectors that need it more.
The state maintains participation and control in infrastructures and structures needed for the production of universal
services, but we radically reduce public expenses and the unreasonable burdening of tax payers.
For the period 2012-2015, our target is to improve the financial results of D.E.K.O. by 2.3 billion euro – both through
increase of their revenues and reduction of their costs.
The restructuring plan includes the major D.E.K.O.’s, such as the transportation companies O.S.E. and O.A.S.A., but
also the productive companies E.A.V. (Hellenic Aerospace Industry) and E.A.S. (Hellenic Defense Systems) and also
E.R.T. (Hellenic Radio and Television).
Increase in revenues means more productive operation, better control on proceeds, development of new commercial
activities and better pricing of goods and services provided.
Accordingly, cost reduction means tidying up and control on costs, merging or closing institutions and functions, better
utilization of human resources and rationalization of payments.
We also investigate all options and potentials for increasing their revenues and utilize their means and assets.
2.1.6
Public assets as a tool for growth, competitiveness, employment
The Government is committed to implement a program of utilizing public assets that will support growth, will bring
investments and jobs and will give a boost to crucial sectors of our economy.
This program will yield revenues of 15 billion euro by 2012 and total revenue of 50 billion euro by 2015.
In this way the debt can be further reduced by 20 percentage points of GDP by 2015 and become much more
sustainable.
11
We aim to attract private funding in important sectors and activities, and also to safeguard public interest and maintain
public participation and control in crucial national infrastructures.
Development of airport infrastructures in the country
Our country needs a modern aviation infrastructure to meet the needs of citizens throughout the country and to
contribute actively to the development of tourism.
In this context we extend the concession of Athens International Airport (A.I.A.) to 2012 and gradually reduce state
participation, to encourage new private funds to move on the task of developing the largest airport in the country.
Our 29 regional airports must also become a tool for the expansion of our tourism product, and the improvement of
services provided to citizens. To achieve the mobilization of private funding and expertise in the operation of our
regional airports, in 2012 we are moving on with creating multi-share companies, along the lines of A.I.A., with
participation of both the public and the private sector.
New port infrastructures
We want port infrastructures that promote tourism and growth. These will be infrastructures producing revenue for
local societies across the country.
To achieve this goal, we will promote as of 2012 the setting up of forms of cooperation between the public and the
private sector both in the Attica Coast System and also in the main regional ports of the country, through regional port
systems.
The marinas of the country are an untapped source of wealth. We move ahead with attracting private funding to
upgrade them into a modern tourist infrastructure.
Road and Railway networks
We want to develop our national road and railway network, to provide secure and development means across the
country, at a reasonable cost to tax payers and all users.
For this reason, we proceed with the creation of modern financial formations to concede the exploitation of motorways
to private investment schemes. This planning includes Egnatia Odos and the Greek Motorways with projected date for
the completion of the concessions process the end of 2011.
We are creating a Special Purpose Vehicle for the securitization of future toll revenues that will be collected by the
state in the coming years, aiming to reduce toll prices at the time of construction, to support the construction of road
networks already in progress, and to reduce public debt.
We already began with the reorganization of O.S.E. (Railways) group to stop producing deficits.
In 2011, we proceed with the privatization of TRAINOSE and also the utilization of the real estate assets of
GAIAOSE.
Defense industry
The Greek Defense Industry supports armed forces and the country’s defense shield and can be a significant
development tool. However, in recent years it has accumulated significant deficits and because of this we have already
proceeded with the restructuring of companies in the industry. In 2011, we proceed with the sale of shares and attract
strategic investors in the Greek Defense Systems (E.A.S.) and in 2012 in the Greek Vehicle Industry (Ε.L.V.O.)
12
The new energy policy
Our goal is the dynamic development of green energy, the upgrading of the geostrategic role of Greece in international
energy networks and energy sufficiency. We are taking the next steps to liberalize the energy market. In this context,
we will reduce the ratio of public participation in D.E.I. (Public Power Company) in 2012.
For the development of natural gas, we attract private funding in 2011 by reducing state participation in D.E.P.A.
(State Natural Gas Company), as well as by exploiting the underwater natural gas storage in the area of Kavala.
In 2011, we move to the full sale of state participation in LARCO.
Water infrastructure
Water is precious and water infrastructures will remain under public control. However, they need significant
investments in order to be modernized and to be able to provide water and irrigation services throughout the country. In
this context, we progress with attracting private investors to E.Y.D.A.P. and E.Y.A.TH.
Broadband infrastructure for all
Greece needs a modern optic fiber network for each household, a modern infrastructure that will be the result of
cooperation between the public and the private sector. In order to create this new infrastructure, we proceed to a
reduction of state participation in O.T.E. (Hellenic Telecommunication Organization) in 2011.
We utilize the frequency spectrum and the digital dividend for modern telecommunications, broadband and digital
growth in 2012.
In 2011, we expand mobile telephony licenses.
In 2012, we will have a strategic investor enter the Hellenic Post to provide universal services with modern quality
standards across the country.
Development of the Greek banking system
The Greek banking system has a highly significant role to play in extending credit to households and businesses and
financing growth in the coming years.
In today’s challenging environment it is necessary for the banking system to proceed with strategic moves and alliances
in order to get fortified and stand ready to support the Greek economy effectively.
By creating the Financial Stability Fund with a capital amounting to 10 billion euro and the extension of guarantees
provided by the Greek state we have created a safety and support net to real economy liquidity.
It is also necessary to make progress with regards to the restructuring of banks in which the state has significant
participation.
The Agricultural Bank of Greece (A.T.E.) has already announced a significant increase in its share capital and has
begun the restructuring efforts. At the end of this course, state participation will be reduced in comparison to the
current levels.
In 2011 the State will to the private sector a percentage of its participation in the equity capital of the Hellenic
Postbank.
The Loan and Consignment Fund’s operations will be divided into a commercial part and a consignment part. The
latter will maintain its public nature with a view to support O.T.A. (Local Government Organizations) and other public
agencies.
Depending on the market’s conditions, the commercial part of the Loan and Consignment Fund will be sold in 2012.
We are effectively dealing with the problem of illegal gambling and we regulate the gaming market
We promote transparency and we work towards regulating the gaming industry.
The state should provide a regulatory framework for transparency and the protection of society in a gaming market
which currently remains largely unregulated and illegal and does not bring revenue to the Greek state.
13
The state will sell its participation in the country’s Casinos and we go ahead with regulating and granting new licenses
to the gaming industry.
We are regulating the market of technical games which costs Greece about 1 million euro fine per month due to
violation of the European legislation.
We are also adopting transparency regulations for the online gaming aiming at protecting players and especially minor
ones, and significantly increasing state revenues.
The role of O.P.A.P. in the betting and technical games is reinforced by extending the time period of the organization’s
rights and its participation through licenses in web betting and new types of games.
In 2011, we move to the equity capital formation of state lotteries.
In 2011, we will begin selling O.P.A.P. shares, which are mainly owned by the state, so as to secure significant
revenues and to ensure its future contribution to culture and sports.
We are currently reforming O.D.I.E. (Horse Racing Organization) while the privatization process is scheduled for
2011.
Utilization of the state’s real estate.
The state owns a huge real estate which is currently not exploited or left to the exploitation and abuse of uncontrolled
private interests.
The use of this property in terms of transparency and public interest protection is clearly a major development tool and
also a way to reduce the large public debt of the country.
For the first time ever, we have begun a full recording and evaluation of the recoverable property by creating an
integrated registry for immovable property.
We move on to create a National Public Land Portfolio that includes specific portfolios for significant immovable
properties.
The use of similar financial tools through organizing such portfolios into Special Purpose Vehicles and their promotion
on international markets via Greek and international banks can bring significant revenue for the Greek state.
We proceed with institutional interventions to be relieved from chronic pathologies that impede their utilization.
We establish the institution of “surface” and long-term leasing.
We legislate the terms of use for holiday and tourist accommodation.
We release the terms of building and urban planning for selected public property for faster development through the
fast track methodology.
We are immediately progressing with utilizing specific mature property of the Greek state, owned by the Public Real
Estate Cooperation (K.E.D.) or the Tourist Real Estate Company (E.T.A.) and the Olympic Properties.
The stagnant public immovable property such as the Olympic Properties and the Helliniko which are currently being
depreciated will turn into a source of relief for the tax payer from public interest and debts and will become a stable
source of revenue for the state.
We are upgrading current infrastructures; by changing their use they provide new value – economic and social – to the
Greek urban environment.
2.2
For a cohesive and protective society
2.2.1
Health services with quality and dignity for citizens
We want a health system that is not a black hole in which the tax payers’ money disappears, a system that provides
quality services to all citizens, by developing, extending and correcting the E.S.Y. (National Health System) services
and also the social insurance system.
The health sector has become a system that spends a lot, with bad management, lack of transparency in supplies, many
and unreasonably distributed hospitals, lack of an integrated primary care, many doctors but few nurses, centralized
and bureaucratic. For example the pharmaceutical cost per capita in Greece is the second highest in O.E.C.D. countries
and almost twice as the cost in Norway.
This results in providing services which are not up to their cost, while the target, especially in this period, is to achieve
more for the citizens with less money.
For this reason, we are saving and redistributing resources inside the health system to:
 Effectively reduce overspending and bad management in supplies.
 clear the accounts and old debts owed by hospitals.
14

ensure sufficiency of pharmaceutical and other material without incurring unfair burden to the Greek tax payer and
insurance payer – for the illicit benefit of a few.
The priority is to operate electronic systems to supervise costs in all hospitals, while expenditures shall be gradually
effectuated through a double-entry system.
By the end of this year, all Hospitals will have computerized systems and double-entry systems at least in their
warehouses, pharmacies and accounting facilities.
Through the electronic supervision of prescriptions, which will gradually expand to all insurance funds, we will
achieve surveillance and control on real costs and needs for medicines, and also improve the speed and quality of
services provided..
We upgrade the health units which currently under-operate in big urban centers and the province, especially in terms of
nursing personnel.
We extend the hospital operation to an all day operation, to make modern medical technology and hospital’s resources
available to citizens instead of visiting private doctors in the evening hours, adding extra revenues to hospitals.
We move on to create a flexible operational framework for hospitals, where the goal is to achieve more financial
independence as well as social accountability.
For the first time, we put in place the foundations for a real Primary Care system by merging the services of the
organizations Ι.Κ.Α., Ο.G.Α., Ο.P.A.D. and Ο.Α.Ε.Ε. and the access to them.
We develop a national strategy for drugs and we will create 5 new OKANA centers before the end of the year.
Finally, we promote a global evaluation study by an experts committee for the restructuring of the first and the second
degree health system.
2.2.2
Employment, social insurance, combating poverty
In this extended economical crisis, measures and policies relating to the welfare state should address the needs of the
groups that suffer the most. Results can now be achieved only via targeted policies, aimed at those citizens that need
them. The clientelism programs and unreasonable benefits that existed in the past do not improve the real life of
citizens; on the contrary, they further increase the debt and deficit burden.
We move towards better targeting and more just distribution of social expenditure, which can lead to savings of more
than 1.2% of the GDP
We promote programs of 2.7 bn euros for the maintaining and creating of new jobs through OAED targeting 800,000
persons. 295,000 positions have already been maintained through a targeted program for subsidizing social security
contributions, whereas 82,000 unemployed have already found a job or have utilized the new opportunities for
entrepreneurship. We promote programs of social work for the creation of 55,000 jobs as well as regional integrated
programs for the creation of 37,000 new jobs in regions in cooperation with the local authorities and other agencies.
Aiming at promoting social entrepreneurship, we establish social economy as a tool for the advancement of collective
social interest. The goal is to facilitate access to opportunities for employment and professional activity for major
sections of the population, to develop alternative forms of entrepreneurship, to promote the creation of jobs and to
combat poverty, and to fight discrimination and social exclusion. The public consultation on the relevant draft law
which is the foundation for social economy and social entrepreneurship is already completed.
We unify the management of social programs under a single agency which will be able to record, monitor and evaluate
the effectiveness of the social and welfare policies. This is the first step and the foundation to establish a system that
can guarantee a minimum standard of living.
We combat the evasion of social security contributions and undeclared work and the first results are already visible
with a reduction of undeclared work from 26% to 23%.
15
We promote fair and effective regulations for social security contributions.
The intensifying of this effort can yield additional revenue amounting to 1.2% of the GDP for the social security
system.
The first and most fundamental value of our social policy is that everyone deserves a protection net for hard times. In
support of this, we extend full medical coverage to all unemployed persons not covered by insurance funds, even to
those who work occasionally or free entrepreneurs. For the first time we establish a minimum welfare pension for all,
because all citizens should enjoy a minimum support at least.
The second value is intergenerational fairness. Today’s generation has no right to deprive the next generations of their
fundamental rights. The pension reform demonstrates a brave and responsible decision towards our children. The
actuarial studies on Auxiliary Insurance Funds will show the possibility of these funds to continue to support the
income of pensioners in the future. In this context it is necessary to achieve a saving from the auxiliary insurance
system, so as to secure the auxiliary pensions for future pensioners.
As we promised, we proceed with a radical change in the issuance of pensions, aiming at significantly speeding up the
relevant procedures.
We develop an integrated network of social protection with policies that support social integration of disabled persons,
support vulnerable groups, combat any form of discrimination and inequality in the labor market and reduce poverty.
The main aim is to eliminate phenomena of social isolation and abandonment, mainly experienced by vulnerable
groups due to the economic crisis and to restore social cohesion.
In this direction we promote the operation of programs which envisage assistance at home (Help at Home, Units of
Social Welfare) and the redesigning of rent subsidy programs ran by O.E.K. (Employees’ Housing Organization). We
also promote policies to fight child poverty via pilot programs that provide access to medical and hospital services to
unemployed persons and poor households, upgrading institutions and welfare services relevant to children, aiming at
the social integration of all children.
2.3
State – public administration – institutions – justice
2.3.1
Introduction
The area of the big changes, which are needed by the Greece we vision, is the state and its institutions. Public
administration and justice, the way our state is organized and the representatives of the citizens are elected in
Parliament, the way our political system functions.
This is the mother of battles in the procedure of reforming the country. Reforming the country starts by these changes.
It is, in fact, an important condition for development, creation of an effective system of social providence and
protection and, above all, enhancement and participation of the citizen to be released from the current situation.
Nowadays, the state has administrative structures, procedures and an institutional framework which are unsuitable and
defective. They do not respond to the needs of the society and the economy in the 21st century.
The state under its current form usually hinders any effort which needs immediate quality support by the state.
The functioning of the state through extended waste, corruption and lack of transparency has significantly contributed
to the collapse of the national economy.
During the past 20 months, this reality is being gradually reversed to the profit of the citizens and the economy. The
effort goes forward without stepping back. We are working so that the public administration, its services and its
institutions function to the profit of and to serve the citizen. We are working so that justice is administrated in a modern
way, immediately and effectively. We are changing the political system to make it more representative, more
democratic and totally transparent as to its operation, so that the lost confidence of the citizens is regained.
16
2.3.2
Public Administration
After our first major intervention in the structure of the operation of the State, the implementation of Kallikratis, and
relegating all new hiring of personnel to the public sector to A.S.E.P. (the Supreme Council for the Selection of Staff),
in the next months we are moving deeper into the core of the problems.
The implementation of Kallikratis leads to savings that by the end of 2015 will reach about 0.5% of the GDP
For the first time, the Greek state achieves a comprehensive system for the management of human resources. We make
programs and deal with recruitment in order to keep the ratio 1:5 (one recruitment per 5 retirements). The
implementation of this rule saves resources that reach 1 percent of the GDP in the wage bill for the period 2012-2015,
without having to further cut back the salaries of employees. Also better management of human resources combined
with the centralization of agencies, reduction of the number of contract-workers and the implementation of an 8-hour
working day, also in the public sector, can lead to additional savings of up to 0.9% of the GDP
Kallikratis is expanding now in the State itself through setting up executive units, removal of overlaps in competencies,
radical simplification of every procedure. Executive functions get decentralized and are given there where the citizen
is. Another major priority is to change the attitude of the body of public employees and officials.
We move to legislate a new comprehensive payroll in Public Administration with rational criteria and aiming to
eliminate current unfairness and inequalities.
Using the official census of public employees, we proceed to utilize personnel according to its knowledge and skills
and with extra training, to promote mobility within the public administration.
We progress with a fundamental change of disciplinary law for civil servants, so that where and when liability is
established sanctions will be immediately imposed. This is the end of the period when those who judged were the same
as those who were being judged. Public officials will have to account for their actions to society daily and not merely to
their colleagues.
One of the most crucial aspects of our interventions, in order to make the state more friendly, simple and efficient for
citizens, is the introduction of new technologies in public administration, which already for decades is plodding along
the rhythms of previous epochs.
After publication of all public decisions online through the program “Diavgeia”, we proceed with electronic
governance everywhere and we have already started to plan the Citizen Card, which will provide citizens with the
facility to complete several transactions without hassle.
The system SYZEVXIS for saving public funds is almost completed, the K.E.P.’s (Citizen Service Centers) are
changing and become E.K.E. (Unified Service Centers). Also the Point of Single Contact (PSC) system “gate ERMIS”
is almost completed, to provide information to citizens and businesses and to facilitate safe handling of electronic
governance services; we also move to create electronic Citizen Service Centers which will gradually reduce queuing
and appointments in a broad range of services provided by the public sector.
This program can be enhanced by ideas and suggestions from every Greek man or woman who cares to contribute to
the improvement of the state, through a crowd-sourcing platform, where all innovative ideas can be submitted, no
matter where they are coming from, so that they can be evaluated and possibly implemented by the Government, Local
Government and public administration.
Lastly, we make maximal use of an important tool of the country, the National Centre for Public Administration and
Local Government (E.K.D.D.A.). We create a Centre for Innovation and Documentation at E.K.D.D.A. to provide
permanent training to public employees, to produce political suggestions, to demonstrate best practices to be applied in
the operation of the State and to produce executives for policies in Ministries.
17
2.3.3
Justice
The system administering justice in our country is stretched beyond its limits. Nowadays citizens and businesses are
practically experiencing a status of denial of justice. The economy cannot find a reliable system to resolve disputes
which would create a safe and stable environment for the development of businesses and the attraction of investments.
Cases of citizens are lingering and the major cases of public interest remain uninvestigated and unresolved for years.
The trust of citizens and businesses is shaken, alongside with the general opinio juris. For us to overthrow this reality is
one of the core concerns of our reformation efforts.
We have already taken the first measures to give administrative justice a breathing space, by rationalizing procedures
and speeding up administrative trials. We proposed the passing of the new bill for acceleration of civil proceedings,
namely civil litigation, by amending the Code of Civil Procedure. These changes are being combined with a
considerable planning in the process of justice, which is already provided for in new legislation: it will be achieved
mainly with the introduction of digital technology into our judicial system, and as soon as this is applied it will bring
up immediate results both in terms of quality and the speed of administering justice.
The planning of the coming period includes a series of radical changes in the ways justice is administered in the
country. We move to digital and interactive electronic processes in the pre-trial proceedings; electronic submission of
court documents, online information and service to citizens and lawyers and also - something that should have been
done years ago to improve the quality of court decisions – the digital recording, storing and disposal of the minutes of
all sessions.
Additionally, the country’s criminal records are getting linked with similar systems in other E.U. countries; for this to
happen we have already started the planning for automation and computerization of detention facilities and their
linking with central offices.
We almost completed the upgrading of the existing Integrated Information System and the providing of electronic
services to citizens and institutions by the Court of Auditors, which will allow a greater degree of transparency in all
the cases it investigates.
All these institutional and practical changes will be combined with an extended intervention for the restructuring of the
National School of Magistrates, so that new magistrates will be equipped with all the tools needed for a society and
economy that is constantly changing, but also for a judicial system that is different, faster and more flexible than was
previously the case.
2.3.4
Political system and Constitution
Changing the electorate law is one of our key election commitments towards citizens. The time has come to
permanently change the way of electing our representatives in the Parliament, as a society, which will liberate us from
the rigidity that led our country to clientelism relations and a deficit in representation for years. In 2011, our electorate
law is changing and now our political system regains its credibility, transparency and accountability.
It is obvious that this major reform will also include the way of financing both of political parties and politicians, so
that both public funds and private funding, which feed our own democracy and the institutions serving it, will be kept
completely in the open and only used for the purpose it is aimed at, which is the improvement of institutions and the
strengthening of the voice of the citizen.
At the top of our priorities is a new Constitution accessible and understandable to every citizen. We will not limit our
effort in one more “technical” review. We want to have a broad debate on the needs of a new constitutional chart. It is
clear that distortions, such as Article 86, on the penal responsibility of Ministers, should be eliminated permanently.
A country’s Constitution is its statutory chart. But for society, it is also the values and ethical framework wherein it
operates and develops. This is why in the formulation of the state’s chart and the restatement of the values that govern
our society, is the society itself, the citizens themselves, as many of them as possible, who are the ones entitled to
participate and to put their claims forward. In the coming months, we will initiate towards this end a broad, methodical
and absolutely open dialogue with the whole of Greek society that will lead to the design for the Constitutional reform
when this possibility is applicable again.
18
2.4
Our position in the world
After many years of inactivity, absence from international developments, absence of initiatives and positions, but also
with an enormous lack of credibility of Greece in the eyes of our partners, we managed to break the isolation and start a
long process of enhancing the credibility and international position of our country.
We achieved this because we believe in our capabilities and the value of our country. Regarding our economy, we
achieved to not be on our own with our problem, drowned in the debts of previous years, left to the voracious appetites
of omnipotent markets and speculators.
We achieved to bring Greece back on stage, to be able to better defend ourselves, while taking-up the efforts and
sacrifices to put our house in order and to make major, obviously needed changes.
All these steps we are taking to drastically reduce the deficits which have almost strangled us, but also the radical
changes in the country, are to begin with the aspects that give us credibility, so as to negotiate better with players
abroad.
And consistency of effort is recognized, as demonstrated by the decisions of the Council of Europe on the 11th and the
25th of March.
But everything we achieve inside the country would not be possible if we didn’t wage and didn’t continue to wage a
battle for the international position of Greece, through a confident, dynamic policy of initiatives. We are present in all
international issues and forums, bilateral or multilateral, with specific suggestions and also initiatives.
Our initiatives express a multidimensional external and economic policy, a foreign policy that is focused at first on our
very family, the European Union.
We are trying to be everywhere, with positions and initiatives, with confidence in our capabilities, with seriousness,
validity and reliability. We are working for a Greece that will not lag behind, but will be at the forefront.
We also broaden and strengthen our role in our neighborhood, the Balkan and Mediterranean regions, by promoting
policies of cooperation with our neighbors so as to build a shared trust that will allow us to save expenditure through
the reduction of our defense armaments.
We reduce the operational costs of our diplomatic entourages and try to support/boost the human resources of the
diplomatic corps so as to enhance the image of our country abroad.
In the field of human resources in the Armed Forces our aim is to implement a new perception that is integrated in the
regulations of the law on hierarchy and promotions of the Armed Forces executives, so as to fully achieve an attitude
based on merit and fairness in the sector of the Armed Forces.
In the sector of social contribution of the Armed Forces, we are completing cooperation with the Ministry of Health so
that military hospitals in Athens and Thessalonica will be open to serve as many civilians as possible; also in the
regions we implement pilot programs for the merging of small military hospitals with larger university, regional or
prefectural hospitals of E.S.Y. to their mutual benefit.
2.5
From deficits to surpluses
The Medium Term Fiscal Strategy Framework: a State which respects the money of the tax payers, a society of
solidarity that does not mortgage the future of our children.
The consolidation of public finances has begun. In 2010 we achieved the biggest deficit reduction ever achieved in our
country or in any other country in the Euro Zone in a single year.
This effort is not just a self-evident need to consolidate the public sector, restore transparency, improve governance,
show respect for the efforts and money of the Greek tax payers who are entitled to enjoy public services and goods of
high quality. It is an effort to restore the credibility of our country, which is a major prerequisite for positive growth
rates, the creation of new labor posts and the financial independence of Greece.
In 2011, we continue the fiscal consolidation effort and also with the sweeping restructuring reforms of the state and
the economy.
19
The major reforms and changes regarding the state, the operation of the public administration, the health system, the
social security system, the welfare state, the public agencies, the tax system, the management of public funds, the
accountability and transparency institutions, the protection and defense, the judicial system and the political system is
the only path that can lead to a true tidying up of the public sector.
It is the only way to restore the trust of citizens and international partners in the Hellenic Republic, to create a state that
ensures justice and enhances the potential of the country and its citizens.
All these interventions are the basis for the formulation of the Medium Term Fiscal Strategy Framework of the country.
This is the first multi-annual framework of fiscal management, which launches the implementation of our commitment
to a multi-annual state budgeting.
The Medium Term Framework is an inseparable part of the major reform in the management of public finances,
established in 2010 via the law on “fiscal management and liability”, which strengthens the institutional control,
accountability and transparency that ensures consistent and sound decisions over the medium term.
It reaches beyond the current attitude of a short-term management and unrestricted possibility to change the goals and
exceed costs.
It creates a framework in harmonization with the regulations set out by our participation in the Euro Zone.
However, the Medium Term Framework does not eliminate the necessary flexibility which the state needs in order to
adapt its goals to changing economic situations since is rolling and will be updated yearly by the Government and
approved every May by the Parliament.
The goal of the Medium Term Fiscal Strategy Framework for the period 2012-2015 is to create a public sector that will
provide the best possible services to the citizens at the present without mortgaging the future of future generations.
The goal is a state that can finance its own needs, a state without deficits and excessive borrowing needs.
To achieve this we will implement changes in both parts of the Budget.
The general government expenditures, which in 2009 were 54% of the GDP, that is for a transaction of 100 euro 54
were funded by tax revenue and the state’s borrowing, will be reduced to the level of 2003, that is about 44% of the
GDP by 2015.
We aim for public revenues, which in 2009 collapsed to 38,0% of the GDP, to reach the levels of 2005 of about 43% of
the GDP by 2015.
None of the goals we set is completely new to the country. What is completely new is the speed with which our goals
will have to be achieved.
The major obstacle in our effort is the high interest costs, which were approximately 4-5% of the GDP for the period of
2000-2006, but currently are over 7% of the GDP.
Because of this, our efforts have to focus on the immediate cut of the debt – through the privatization program – but
also through the rationalization of public spending, so that the loss caused by interest expenditure will not lead to lesser
state even at sectors which is crucially important.
The effort to cut back public spending, through rationalization of how the state is being run, will have to increase.
Nevertheless, horizontal cuts to pay-rolls and pensions shall be avoided but, instead, favor targeted interventions and
immediate cuts of the state in those sectors and functions that do not provide real services to citizens.
The effort to increase revenues can neither be based on an horizontal increase of the tax burden upon employees, nor
on an increase of the tax burden upon investment, nor on an increase of the burden upon employees via the increase of
their contributions.
The effort will almost exclusively be based on fighting tax and contribution evasion, increasing the collection of fees,
taxes and contributions, broadening the tax base, and adopting a fairer distribution of the tax burden.
Our goal is to reduce deficits from 15.4% of the GDP in 2009 to about 1% of the GDP by 2015.
The debt, which is more than 150% of the GDP and expected to reach up to 160% of the GDP (after the
implementation of the privatization program), will start to decrease after 2012.
The size of the fiscal effort for the period 2011-2015 is about 28.0 bn euro or about 11% of the GDP The effort will
aim to reduce costs and increase revenue.
20
3.
Epilogue
The path we chose is the option favored by the vast majority of citizens. We draw the line with past practices and
rebuild Greece on sound fundamentals such as a healthy economy, enhanced competitiveness, fairness and social
protection.
Any other path would lead Greece to destruction, isolation and lower our living conditions to levels similar to the ones
of the far past.
Everything we are doing is part of an ambitious but realistic road map towards a better future. Hard work is still
needed, but the goal is feasible if we are all prepared to join efforts.
Citizens themselves are the leading factor of this effort towards a new era. They are the creative force claiming a better
Greece for the future and for our children. It is our obligation to materialize this public demand and to leave behind all
those who insist to regress to the past.
Because the kind of Greece we visualize is to be found in the future.
CHAPTER 2
BASIC ASSUMPTIONS OF MTFS
AND BASELINE SCENARIO 2011
1.
PRESENTATION OF THE MEDIUM TERM FISCAL STRATEGY (MTFS)
The MTFS as a fundamental reform of the financial management
One of the most important reforms for the modernization of the management of public expenditures, which is reflected
in the new Organic Fiscal Management Law 3871/2010, is the introduction of a rolling Medium Term Fiscal Strategy
Framework (MTFS).
This framework is the key component to a different philosophy of managing public resources and the first step towards
the transition to multi-year budgets. It also contributes to consolidating the concept of multi-annual programming of
public finances.
At the same time, our country is maping for the first time a medium term fiscal strategy through the collective debate
process, which was the request of a large part of the political parties.
Main concepts
The MTFS adopts a top down approach to the budget and does not focus only on the central government but on the
general government as a whole, while it is based on a line by line and by entity budget analysis.
This gives a clear picture of the limits and commitments undertaken for the next period and outlines the key policy
directions and priorities. It also sets specific targets, timetable and output indicators in an effort to control expenditure
and gradually reduce the deficit by setting expenditure ceilings for the central government (ministries).
Historical background and international experience
The idea of multi-annual budgets and the recent management framework of public resources is not a newly used one. It
21
has begun to be systematically implemented almost from the beginning of the 80s and is now widespread in all
developed countries. Australia, Canada, Denmark, Belgium, Sweden, England and the U.S. had already begun using it
in the 80s.
Multi-year programming relied on the theory of optimizing social welfare through rational decision-making regarding
the amount and distribution of expenditures, thereby achieving cost minimization and the optimum benefit.
Looking at the European experience we can see that all developed countries adopt the new philosophy of managing
expenditure, in order to succeed in reducing the operating costs of the government and the deficits. This was
particularly intense in the last 10-15 years with increased international competition and the emergence of the financial
crisis later.
France began in 2001 with the development of a zero-basis budget with four years orientation allocated to programs,
with implementation rates and effectiveness indicators.
In Germany, the annual budget follows since the 60’s four major macro-economic principles: stable growth, stable
prices, high employment and balance of external trade.
The Nordic countries (Denmark, Finland, Norway and Sweden) strengthened fiscal discipline since the early 90s and
have experienced great economic boom compared to the previous deficits and high public debt. Since 2003, Finland,
Sweden and Denmark have surpluses.
But the EU budget is also based on medium term -seven years- programs and each year and sector of activity includes
the amounts committed to be spent without any possibility of overruns. To strengthen even more this process and to
identify any discrepancies or imbalances in the fiscal and structural policies of the Member States, the EU recently
introduced the so-called European semester.
The European semester is the period (January to June of each year) during which an attempt is made to strengthen the
coordination of budgetary decisions, identify the main economic challenges the EU faces and provide strategic advice
on the policies of Member States.
The advantages of implementation of the new fiscal framework
According to international experience and despite the fact that each country has implemented different strategies and
methods of financial management in medium-term planning, all studies recognize that the system of expenditure
management has substantially improved, targets were met and usefulness of this policy has been highlighted.
The organizational structure and governance and decision making in the public sector have also substantially improved.
For this reason, according to OECD data, 50% of the OECD member states have now adopted a system of efficient
administration / management of public expenditure.
Strengthening the role of Parliament
Another important improvement in fiscal management is the strengthening of the role of the Parliament.
With the MTFS, for the first time, government policies and measures for the period examined will be discussed.
The annual budget is not a separate document, but is now a part of the overall medium-term policy.
The control of Parliament becomes more essential. The Parliament can closely monitor the actual implementation of
measures to manage performance, to propose corrective measures and to assess the effect on the benefits obtained.
For those reasons, the adoption of the MTFS by the Parliament takes the form of an important political intervention as
it is a government mandate for economic, political and social choices to be implemented on time, that is how to spend
public money in general.
Content of MTFS
According to the law 3871/2010, the MTFS includes, for the budget year and the next three years, mainly:
22










medium-term targets for the general government and individual entities,
description and assessment of macroeconomic and fiscal developments and forecasts for the past two years, the
current year, the budget year and the next three years,
all assumptions of economic and fiscal forecasts (elasticity and compliance rates for the main sources of revenue,
employee number, salary and pension developments, benefits, costs of goods and services, investment and interest
costs),
the main sources of risk to the financial forecasts,
the target for general government deficit,
the total expenditure ceilings for the general government and the upper ceilings of the state budget, SSFs, LGOs for
the period,
the expenditure and revenue of the central government, local government, social insurance for the relevant years,
estimated expenditures of the central government per ministry for the next budget year and the expenditures for the
period,
revenues and expenditures of the central government by economic category and provisions on tax revenues and
expenditures for the period,
estimates by economic category of gross costs, revenue and deficit or surplus in the social budget and consolidated
budgets of local government.
Contents of annual budgets
Annual state budget
The annual state budget includes estimates for the entire main economic aggregates of the central government,
including the outstanding debt, guarantees and loan acts of the general government.
It also includes the estimates of the amount of transfers from the state budget to local government, social organizations
and hospitals (and other bodies as appropriate) for the budget year and the next period.
The planning margin to cover the cost of future policies and errors in the estimates of expenditure for the years after the
budget year, amounts to no less than 1 and no more than 2 percent of the government budget expenditure for a given
year.
Annual social budget
The annual social budget includes provisions for the fiscal year in revenue, expenditure, surplus/ deficit, consolidated
balance sheets of the social security system and each of the major pension funds and groups of hospitals.
Consolidated annual budgets of local government
The consolidated annual budgets of local government include provisions for the corresponding financial year in
revenue, expenditure, surplus/deficit and consolidated balance sheets of the local government sector.
Consolidated annual budgets of other government agencies
The consolidated budgets of other agencies of the general government include gross costs, revenue, total surpluses or
deficits, funding sources as well as balance sheet financial assets and liabilities and secured debt obligations of all
public bodies that are part of the general government and not covered from the state, social or consolidated annual
budget of local government.
23
2.
THE ECONOMY
2.1
Recent developments
The 2008-2009 international economic crisis exposed the long-standing structural weaknesses and revealed the fiscal
and external imbalances of the Greek economy. However, in 2010 an ambitious Economic Adjustment Programme
has been adopted, focusing on:
1. a frontloaded fiscal consolidation effort in order to secure debt sustainability
2. securing financial sector stability and adequate liquidity in the banking sector
3. implementing across the board structural reforms aiming at boosting productivity growth and competitiveness.
Switching to a different growth model based on investment and exports it is expected to result to a gradual,
though more robust and sustainable, recovery of the economic and fiscal performance.
In 2009, real GDP growth turned negative (-2.0%). This development is mainly due to the decrease of gross fixed
capital formation (-11.2%), with major components of investment moving on negative ground, and machinery being
the most notable example (-22.1%). Government consumption growth accelerated substantially (10.3% vs. 1.5% in
2008), while the external sector of the economy contributed positively to growth, with imports and exports both
recording significant losses (-18.6% and
-20.1% respectively).
As far as price developments are concerned, inflation (based on CPI) decelerated to 1.1%, mainly as a result of the
contraction in aggregate demand (and, to a lesser extent of supply side factors such as labour market developments
leading to significant deceleration of compensation per employee growth). Core inflation, however, was twice headline
inflation (2.4%), reflecting other than conjunctural factors (such as persistent inefficiencies of product and services
markets).
The unemployment rate increased to 9%, with employment recording negative growth (-0.7%).
Regarding 2010, real GDP growth is estimated at -4.5% (it is notified that the provisional revised quarterly estimates show a
growth rate of -4.35%), with private consumption falling by 4.5% recording a particularly strong contraction in the
fourth quarter (-8.6% yoy) mainly as a result of developments in employment, disposable income, credit expansion and
consumer sentiment. Government consumption is estimated to have decreased by 6.5%, while gross fixed capital
formation moved on very negative ground (-16.5%), as a result of a negative business sentiment, falling capacity
utilization and restrained supply of credit.
On the other hand, the contribution of the external sector to GDP change is again estimated to be positive (2.3 p.p.).
This development stems from imports falling significantly (-4.8%) and exports recording an impressive rebound
(+3.8% vs. -20.1% in 2009). The latter is mainly the result of a more favourable external environment, gains in
domestic price and cost competitiveness and the fact that most Greek firms already export a part of their output (thus
having an existing export base which is easier to expand rather than establish starting from scratch) (Quarterly Report
of the Euro area, vol.9, no 3, (2010)). Regarding competitiveness developments, the real effective exchange rate
decreased by 0.5% based on CPI or 2.4% based on the Unit Labour Cost (performance relative to the rest of 35
industrial countries: double export weights).
CPI inflation was 4.7% on average reflecting, to a large extent, increases in indirect taxes and excise duties; more
specifically, it is estimated that approximately 70% of price increases can be attributed to taxation. It comes as no
surprise that the CPI components most affected by increases in taxation recorded the highest rates of growth (alcoholic
beverages and tobacco +14.8%, transport +16.2%).
As a result of economic activity falling sharply, employment is estimated to have decreased by 3.2%, thus resulting to
an unemployment rate of 11.5% (on a national accounts basis). It is an encouraging sign, however, that developments
concerning compensation per employee (-1.8% in nominal terms,
-6.2% in real terms) and, as a result, unit labour
costs (-1.8% in nominal terms) could be inducing more favorable dynamics in the labour market, also supported by
structural reforms.
24
2.2
Medium-term prospects
The macroeconomic prospects are expected to improve in the medium term, enhanced by improved fiscal performance,
structural reforms and more competitive product and labour markets.
GDP is projected to start flattening up in 2011 (-3.5%) with recently announced provisional estimates for the first
quarter showing an increase in GDP compared to the previous quarter (+0.8%, Q/Q-1) (Estimates for the development
of GDP in 2011 vary from -2.5% (several financial organizations) to -3.8% (European Commission/ECB)). Thus, a
positive carry-over is projected for 2012 (resulting to a growth rate with a positive sign, namely 0.8%), with growth
gradually accelerating to reach 2.7% in 2015. As a result of the continued fiscal consolidation effort, government
consumption is expected to keep declining until 2014 (-3.4% on average for the 2011–2014 period, +0.3% in 2015),
while growth in private consumption is expected to remain subdued (turning from -4.8% in 2011 and -1.2% in 2012 to
1.1% in 2013 and gradually accelerating thereafter to reach 1.3% in 2015). Gross fixed capital formation is projected to
remain on a gradually recovering path (returning on positive ground in 2013 and accelerating to 5% in 2015), while the
contribution of the external sector is expected to remain positive, on the back of high export growth (6.6% on average
during the 2011–2015 period) and low import growth (0.1% on average during the same period and recording positive
rates as of 2013).
Inflation (based on HCPI) is projected to moderate to 2.9% in 2011, with lower growth rates expected from 2012 on
(averaging 1.4% over the 2011 – 2015 period). In the short-run, price developments in 2011 will be affected by the
latest VAT increase in January, international oil prices and the pricing policy of state-owned enterprises aimed at
containing borrowing requirements. After the tax effect has faded-off, structural reforms affecting competitive
conditions in the product and services markets are expected to positively affect price developments, possibly
counterbalanced (to a certain extent) by import prices.
Employment is projected to decrease by 3.2% in 2011, remaining on a gradually recovering path from 2013 on and
recording an average growth rate of -0.2% in the 2011 - 2015 period. The unemployment rate is expected to increase
further in 2011 (14.5%), peaking in 2012 (15%) to decline steadily to 13.6% in 2015. Labor market developments are
expected to be favorably affected both by relevant structural reforms implemented or planned and also by wage
moderation expected for the whole period up to 2015.
25
Table 2.1 Economic Data
2009
2010
2011
2012
2013
2014
2015
Gross Domestic Product, euro billions, current prices
Private consumption
% real growth
Total Investment (Gross fixed capital formation)
% real growth
Government consumption
% real growth
Exports
% real growth
Imports
% real growth
Gross Domestic Product
% real growth
172.6
-2.2
32.2
-13.9
49.7
10.3
44.3
-20.1
69.5
-18.6
235.0
-2.0
172.7
-4.5
33.9
-16.5
41.9
-6.5
48.2
3.8
67.7
-4.8
230.2
-4.5
169.1
-4.8
31.5
-7.1
37.7
-8.4
52.4
6.4
67.1
-4.2
225.4
-3.5
168.8
-1.2
31.3
-2.2
36.5
-4.0
56.5
6.7
66.5
-3.0
228.4
0.8
172.5
1.1
32.1
1.1
36.5
-1.0
61.7
7.2
69.0
1.6
235.5
2.1
176.3
1.2
34.0
4.0
36.8
-0.3
67.1
6.8
73.1
3.6
242.9
2.1
180.2
1.3
36.3
5.0
37.3
0.3
72.5
6.1
76.6
2.7
251.9
2.7
Prices
Consumer Price Index (average) (2000=100)
% change
GDP Deflator (2000=100)
% change
Euro/Dollar exchange rate
% change
Oil Price ($/barrel)
% change
130.1
1.1
130.4
1.3
1.4
-5.4
61.5
-36.6
136.3
4.7
133.7
2.5
1.3
-4.3
80.2
30.4
140.3
2.9
135.7
1.5
1.4
5.8
112.8
40.6
141.7
1.0
136.3
0.5
1.4
0.0
112.0
-0.7
143.2
1.1
137.7
1.0
1.4
0.0
100.0
-10.7
144.8
1.0
139.0
1.0
1.4
0.0
100.0
0.0
146.1
0.9
140.3
0.9
1.4
0.0
100.0
0.0
Labour Market
Employment, 000 persons, national accounts basis
% of population
Unemployment, 000 persons
% of workforce, national accounts basis
Compensation of employees, euro billions
Gross operating surplus/mixed income, euro billions
4,758
42.2
471.0
9.0
88.6
123.7
4,658
41.2
628.7
11.5
83.5
121.8
4,509
39.8
766.8
14.5
79.6
119.5
4,495
39.6
792.9
15.0
79.7
121.4
4,536
39.9
767.5
14.5
80.0
128.1
4,568
40.1
747.6
14.0
80.4
134.9
4,604
40.3
724.9
13.6
80.7
143.3
1.2
200
0.8
635
4.1
2.1
Monetary Sector
Interest Rate (short-term)
Spread 10 year yields bonds (Greece-Germany), base
points
Credit Growth (to private sector)
External Sector (% of GDP)
External balance of goods and services, national accounts
basis
Current account, national accounts basis
Gross external debt
Net international investment position
-10.7
-8.5
-6.5
-4.4
-3.1
-2.5
-1.6
-14.0
173.5
-84.9
-11.8
178.3
-98.2
-10.0
-7.9
-6.6
-5.9
-5.0
External Economic Environment (% of change)
World Output
Euro area output
World trade volume (goods and services)
Euro area HICP
-0.5
-4.1
-10.9
0.3
5.0
1.8
12.4
1.5
4.4
1.6
7.4
2.2
4.5
1.7
6.9
1.7
4.7
2.0
7.0
1.7
4.7
2.0
7.0
1.7
4.7
2.0
7.0
1.7
26
3.
MEDIUM-TERM FISCAL STRATEGY: FISCAL ISSUES AND RISKS
3.1
Introduction
The main risks threatening the fiscal effort of the Greek economy are related to the high deficit and the extremely high
public debt. Over the last decade, despite high growth rates, which basically relied on high demand financed through
borrowing, the deficit of the Greek economy remained high, thus feeding the dynamics of the public debt.
It is certain that the economic situation of our country today, as well as the international economic conditions, lead us
to the need for fiscal consolidation outlined in the objectives of the Medium Term Fiscal Strategy 2012-2015. Its
successful implementation depends on the size of the problems themselves and the fiscal and market risks involved in
the process.
3.2
Fiscal Management issues in the Greek Economy
Greece is currently pursuing a painful fiscal adjustment, which already appears to be bringing about results. However,
the country needs to implement a fiscal program that will lead to the reduction of the deficit and public debt ratios to
GDP, and support sustainable growth by facing all the structural problems that created the current situation over time:
 High structural deficits leading to a high debt to GDP ratio over the past decade, which ultimately led to the
exclusion of the country from the international capital markets by increasing spreads to prohibitive levels.
 Persistent deficits of the general government sub-sectors due to inherent structural problems with limited control
over the expenditure of general government.
 Non-competitive economy due to structural problems and rigidities (complicated tax system, bureaucratic
procedures, ineffective tax collection mechanism etc), impeding new investment.
The low credibility of the public sector as reflected in the after crisis downgrading of its credit rating, had a direct
impact on the liquidity of the greek banking system as well.
It is now clear that a solution to these problems can only be achieved through structural changes and an efficient fiscal
management that will lead to restoring the credibility of the country.
In this context, measures are to be taken not only addressing the reduction of the public spending and the increasing of
public revenues, but also structural measures in order to reduce the size and increase the effectiveness of the public
sector as well as to remedy the chronic rigidities and distortions of the economy, the labour market and the health and
social insurance system.
3.3
Macroeconomic and Fiscal Risks for the MTFS
3.3.1
Macroeconomic risks
The successful and effective implementation of the Medium Term Fiscal Strategy is subject to risks of given
complexity, such as:
 The global macroeconomic environment and the volatility of interest rates, fuel prices and exchange rates,
 Macroeconomic aggregates in the Greek economy not in line with the projections of the Medium Term Fiscal
Strategy Framework 2012-2015 leading to reduced revenues and increased expenditure,
 Adverse developments in the markets (CDs, spreads, etc.) and
 Weak response of the banking system for providing adequate liquidity in the real economy.
According to the prevailing estimates, the Greek economy will reach the lowest point of the economic cycle in the first
half of 2011 and a recovery is expected to begin gradually in the second half of the year. However, a significant
improvement in the economic activity and prospects is expected from 2012.
This scenario is subject to a number of risks:
27
 The volatility of international oil prices. It is possible that the global economy may not recover as expected, affected
among others by the geopolitical developments in the Arab world and the rising price of oil. Given that the Greek
economy is highly energy-dependent, the inflation rate could adversely affect its competitiveness, particularly
through the negative performance in exports and tourism.
 The expected increase in interest rates by the European Central Bank due to the increasing inflation rate in the eurozone might put additional pressure a) on the banking system that could obstruct the financing of the private sector
and b) on the fiscal effort due to higher interest payments in connection with the floating part of the debt.
Simultaneously, the rise in euro-zone interest rates would tend to lead to an appreciation of the euro, thus affecting
negatively the prospects for Greek exports. Such a scenario could lead to a slowdown of the fiscal adjustment pace,
demanding for the undertaking of additional measures or policies by the government.
 A deterioration of the macroeconomic scenario due to the above factors could have an adverse impact on the labour
market as well, in terms of unemployment, with further effects on private consumption and revenues of the social
contributions system.
The consistently higher, than the European average, inflation in Greece in the past decade has contributed to a
gradually lower competitiveness of the greek economy, resulting in the slowdown of export growth and the loss of
market share.
Moreover, achieving sustainable growth in the coming years requires a change in the growth model of the Greek
economy from the existing consumption oriented model to a new one, based on domestic and international investment
and exports.
A potential risk would be, the greek economy to recover at a slower pace than the MTFS projection, i.e. that the
recovery of the Greek economy will start later than anticipated in the MTFS, thus delaying the recovery of both private
consumption and investment.
In this context, the greek government is determined to keep the momentum of the structural reforms, through the rapid
implementation of the measures and, therefore, their timely yield, so as to consistently ensure growth potential of the
greek economy.
3.3.2
Fiscal risks
The state budget revenues projections have been based on the expected nominal change in macroeconomic indicators
of the greek economy for the years 2011-2015, adjusted by the execution outcome of the budget for the first quarter of
2011. Particularly, projections are linked to macroeconomic variables (GDP, total consumption, labour costs, etc.)
taken into account in the formulation of the baseline scenario for tax revenues.
Due to objective difficulties in reliably forecasting the elasticity of revenue in the following years, particularly this of
tax revenues, the assumption of unit-elasticity was followed. There is additional difficulty in determining the tax
revenue elasticity during the structural transition from a period of economic growth into that of recession. Under this
assumption, a change in macroeconomic variables affects pro-rata the revenue projections for the period 2011-2015.
Therefore, any deviations between the macroeconomic assumptions of the baseline scenario and the actual ones would
result in a proportional deviation from projected revenues for the period.
Moreover, additional risk may arise from the possibility that the actual elasticity of various revenues sub-categories can
be different than the unit elasticity assumption of the MTFS.
An important gradual increase is expected in tax revenues with a view to collecting 5.5 bn euros by 2015, in relation to
2011, through the implementation of the Action Plan for the fight against tax evasion (Law 3943/11). The program
includes a series of measures aiming at the expansion of the tax base, tax compliance of citizens, acceleration of the
receipts of tax arrears, development of techniques and methodology to improve the efficiency of tax control and
strengthening of tax management by combating corruption. The fight against tax evasion is a national first line priority
of the greek government, targeting not only to improve the tax compliance rate, but also to remedy the injustice of the
taxation system. However, apart from the government’s determination to combat tax evasion, the citizen’s response and
motivation is considered to be a decisive factor.
28
The new legal framework which imposes a direct control on the expenditure (top-down budgeting approach and
imposition of expenditure commitment register) for both the line ministries and the rest of the bodies of the general
government sub-sectors ensures the fulfilment of the Medium Term Program. Given the firm commitment of the
government to reduce public sector spending, the only expenditure overrun risks are connected with the possible
deviation from the macroeconomic assumptions of the MTFS or unpredictable events.
3.3.3
Public Debt: evolution and servicing costs
Factors increasing the debt
The evolution of public debt and the servicing cost in terms of interest payments involves multiparametric assumptions
connected with a) the sensitivity of the debt portfolio, b) the capital and money market conditions, c) the fiscal
adjustment effort and d) the privatisation and management of public property.
Sensitivity of debt portfolio
The factors defining the sensitivity of the current structure of the total public debt portfolio are the following:
 The weighted average duration Index of the current debt portfolio, including management operations, is at levels of
3.4 years.
 The floating-rate debt (including the liabilities related to European inflation) is about 35% of total debt.
 The portion of the debt portfolio maturing and in need of refinancing within the next 60 months (5 years) constitutes
57% of the total portfolio.
 The amount of debt which is to be refinanced or re-fixed within the next 12 months (1 year) currently stands at 49%
of the total debt portfolio.
The current composition of the debt portfolio entails some sensitivity in connection with the movements of interest
rates. The PDMA, through the active management of the debt portfolio, pursues the optimum composition of the
portfolio in terms of duration and interest rate risk sensitivity, according to the prevailing market conditions, so as to
minimize a possible negative impact on the budget due to adverse and sudden changes in the markets.
Capital and money market conditions
 High volatility of interest rates used for calculating interest on floating-rate debt. Any increase in short-term interest
rates might result in an increase in interest costs of floating-rate loans (euribor plus margin). The risk of increased
interest rates at levels higher than those projected in the MTFS could eventually affect not only the overall servicing
cost, but also the refinancing cost of the country’s borrowing needs (amortization and deficits) in case of Greece’s
re-access to the international capital markets from 2012 onwards.
 Increase of the European inflation index which is the basis for the calculation of principle and interest adjustments
of index-linked bonds.
 Negative changes in exchange rates, which form the basis for the calculation of exchange rate differences.
 Changes in the institutional and legal framework of markets and the banking sector.
Fiscal adjustment effort
The sustainability of the public debt under the MTFS program is ensured under the policy of generating large primary
surpluses and strong growth. In this context, the firm implementation of the MTFS program is a prerequisite.
According to the MTFS program, the adoption of certain assumptions for the nominal growth of GDP and for the
evolution of nominal interest rates, as well as the building up of primary surpluses above 5.5% from 2013 onwards,
would lead to a sustainable government debt.
3.3.4
Privatisation and state assets management programs
The evolution of the debt is also connected with the privatisation plan. The Government has committed itself to
undertake an ambitious privatisation scheme of 50 bn euro in the period 2011-2015. This scheme constitutes an integral
part of the Medium-Term Program (MTP). An analytical presentation of the privatisation and state assets management
program follows in chapter 3.1
29
4.
BASELINE SCENARIO
4.1
General Introduction
The baseline scenario aims at the accurate presentation of the evolution of the fiscal aggregates and, in particular, fiscal
deficits, at the general government level for the period 2011-2015, based on the assumption that no additional
interventions will be made, beyond those already legislated up to December 2010.
4.2
Comparative analysis of budget and actual data for the period 2009-2010
4.2.1
Fiscal year 2009
In 2009 there was a significant deviation in the budget execution (deficit 14.3% of GDP) compared to the budgeted
central government deficit of 4.2% of GDP. Beyond this particularly negative development, the communication of
unreliable data regarding the execution of the 2009 budget to the official E.U. agencies caused an issue of credibility of
the Greek statistical data and the statistical system of our country in general. The aforementioned events combined
resulted in the inability of Greece to access the capital markets and its adherence to the E.U. Support Mechanism.
From a technical aspect, the above mentioned deviation is due to:
 The shortfall of ordinary budget revenue by 13,727 mn euro (5.8% of GDP) and the increase of tax refunds by 1,652
mn euro (0.7% of GDP),
 The increase of primary ordinary budget expenditure by 4,650 mn euro (2.0% of GDP),
 The increase in interest payments by 325 mn euro (0.1% of GDP),
 The shortfall of PIB revenue, due to the reduced EU inflows by 1,660 mn euro (0.7% of GDP),
 The increase of the PIB expenditure by 788 mn euro or 0.3% of GDP and, finally,
 The negative impact by 1.5%, due to the downward revision of the GDP.
The General Government deficit for 2009 closed at 15.4% of GDP compared to a projection of 2%.
The credibility of the statistical system of our country was restored after a) a second audit performed by Eurostat on the
fiscal data of the period 2006-2009 and b) a series of institutional interventions undertaken by the Government, with a
special reference to rendering the Hellenic Statistical Authority (ELSTAT) an independent agency. Greek statistical
data are now considered fully transparent and reliable. (Eurostat 1720/15-11-2010 press release: “Eurostat withdraws
its reservations for the greek statistical data that it had expressed in its 55/22-4-10 press release”).
30
Table 2.2 Comparison of budget and actual data 2009-2010
2009
Budget
State Budget
Ι. Revenue (1+2)
1. Net ordinary budget revenue (a+b-c)
a. Recurring Revenue
b. Non recurring revenue
c. Tax refunds
2. Investment Budget Revenue
ΙΙ. Expenditure (1+2)
1. Ordinary budget expenditure (a+b+c+d)
a. Primary expenditure
b. Grants to hospitals to cover their past debts
c. Interests
d. Payments for military expenditure
2. Investment budget
ΙΙΙ. State budget deficit (Ι-ΙΙ)
% GDP
ΙΙΙ. a. Primary outcome (ΙΙΙ-ΙΙ1c)
% GDP
IV. Balance of LGOs, SSFs, hospitals and other
PLEs
V. National accounts adjustments
VI. ESA95 adjustments
VII. General Government Balance (III+IV+V+VI)
% GDP
GDP
4.2.2
65,972
62,272
64,200
1,372
3,300
3,700
76,978
68,178
53,978
Actual
2010
Difference
Difference
(% GDP)
12,000
2,200
8,800
-11,006
-4.2%
994
0.4%
50,585
48,545
52,307
1,190
4,952
2,040
84,215
74,627
58,628
1,498
12,325
2,175
9,588
-33,630
-14.3%
-21,305
-9.1%
-15,387
-13,727
-11,893
-182
-1,652
-1,660
-7,822
-7,034
-4,650
-1,498
-325
25
-788
-22,624
-10.1%
-22,299
-9.4%
-6.5%
-5.8%
-5.1%
-0.1%
-0.7%
-0.7%
-3.3%
-3.0%
-2.0%
-0.6%
-0.1%
0.0%
-0.3%
-9.6%
4,350
-575
1,390
-5,266
-2.0%
260,248
-2,150
0
-528
-36,308
-15.4%
235,017
-6,500
575
-1,918
-31,042
-13.4%
-2.8%
0.2%
-0.8%
-13.2%
-9.5%
Budget
Actual
Difference
Difference
(% GDP)
57,560
53,700
56,950
1,400
4,650
3,860
82,796
72,496
56,846
0
12,950
2,700
10,300
-25,236
-10.3%
-12,286
-5.0%
54,259
51,187
54,383
1,786
4,982
3,072
75,690
67,243
52,627
375
13,223
1,017
8,447
-21,431
-9.2%
-8,208
-3.5%
-3,301
-2,513
-2,567
386
-332
-788
6,135
4,282
4,219
-375
-273
1,683
1,853
3,805
1.1%
4,078
1.5%
-1.4%
-1.1%
-1.1%
0.2%
-0.1%
-0.3%
2.6%
1.8%
1.8%
-0.2%
-0.1%
0.7%
0.8%
1.6%
2,465
-550
595
-22,176
-9.1%
244,233
1,384
0
-4,145
-24,191
-10.5%
230,173
-1,081
550
-4,740
-2,015
-1.4%
-0.5%
0.2%
-2.0%
-0.9%
0.0%
1.8%
0.0%
Fiscal outcome of the year 2010
Based on data provided by ELSTAT in 2010, Greece had the second largest deficit in the E.U.
(-10.5%), second
only to Ireland (-32.4%) and followed by the United Kingdom (-10.4%), Spain
(-9.2%) and Portugal (-9.1%). It
presented though, in 2010, a reduction in deficit of 5 percentage points of GDP, the most significant ever achieved in
Greece or in any other member-state of the euro zone in one year.
As to the public debt, based on the Eurostat data for 2010, Greece had the largest public debt in the E.U. (142.8% of
GDP), followed by Italy (119% of GDP), Belgium (96.8% of GDP) and Ireland (96.2%).
Comparison between budget and actual data of 2010
The comparison of the fiscal outcome of 2010 (24,193 mn euro or 10.4% of budget GDP) with the 2010 budget
execution estimates as presented in the 2011 budget report (21,900 mn euro or 9.4% of GDP) shows a deterioration in
the 2010 deficit of 1% of GDP.
This difference is analyzed as follows:
As to the state budget balance without ESA adjustments, the performance was better by 1,636 mn euro or 0.7
percentage points of GDP (the projection in the introductory budget report for 2011 was at 23,067 mn euro and the
respective amount in the baseline scenario is at 21,431 mn euro).
On the other hand, there is a deterioration of the ESA adjustments of the state budget deficit by 0.9 percentage points of
GDP (2,180 mn euro), which is mainly due to the deterioration of the adjustment in tax revenues by 0.6% of GDP
resulting from the fact that the recession in the last quarter of 2010 was larger than projected in the State Budget 2011.
It should be noted that tax revenues for 2010 on a national accounts basis are determined also by the level of certain
categories of revenues in the first two months of 2011, which to a large degree reflect economic activity in the last
quarter of the previous year.
31
There was a significant deterioration in the balance of Local Government Organizations (LGOs) (0.25% of GDP), that
relates to the repayment of past obligations at the end of the year.
There was an improvement from the balance of the reclassified State Owned Enterprises (SOEs) (0.3% of GDP), as
well as in the accrued interest payments adjustment of national accounts (0.29% of GDP).
There was a deterioration from the Social Security Funds (SSFs) ESA balance (0.5% of GDP), as the larger than
projected increase in unemployment led to a reduction in social security contributions. As with tax revenues, it should
be noted that the performance of Social Security Funds for 2010 on a national accounts basis is determined also by the
level of certain categories of social security contributions in the first two months of 2011.
Finally, a significant deterioration came from the branch of hospitals (0.3% of GDP).
From the above, it is clear that the deviation comes as a result of the deeper than expected recession of the Greek
economy which influenced the tax revenue as well as social security contributions. At the same time, it underlines the
real difficulties about the reduction of the deficit in budget areas (fighting tax evasion, reduction of operational
expenditure etc) or general government sub-sectors where greater efforts are needed (fighting contribution evasion,
hospital expenditure, SSFs, LGOs, SOEs).
Table 2.3 Deviation between budget and actual data
of the General Government in 2010
2010 Deficit
Budget
Outcome
Differences
% GDP
Differences
GDP (according to budget)
231,888
State budget deficit without adjustments
-23,067
-21,431
-1,636
-0.7
1,673
-455
2,180
0.9
-21,394
-21,938
544
0.2
20
-565
585
0.3
EBFs balance without SOEs
102
201
-99
0.0
Reclassified SOEs balance
-540
97
-637
-0.3
ESA adjustments
State budget deficit with adjustments
LG ESA balance
SSFs ESA balance
382
-847
1,229
0.5
Hospitals ESA
-470
-1,141
671
0.3
-21,900
-24,193
2,293
1.0
-9.4
-10.5
General Government deficit
% GDP
4.3
Baseline scenario
4.3.1
Basic macroeconomic assumptions
1.0
For the baseline scenario, the following assumptions about the basic macroeconomic aggregates for the period 20102015 have been taken into account:
Growth: The decline of the real GDP was -4.5% in 2010, while from 2011 onwards there is a gradual improvement of
the index, since it is estimated that for 2011 it will close at -3.5% (Estimates for the development of GDP in 2011 vary
from -2.5% (several financial organizations) to -3.8% (European Commission/ECB)), while from 2012 onwards it is
expected to follow a constantly positive trend, as it is estimated to be at the level of +0.8% in 2012, +2.1% in 2013,
+2.1% in 2014 and +2.7% in 2015.
Employment- Unemployment: Reduction in financial activity is also reflected in shrinking employment and increasing
of unemployment. The unemployment rate for 2010 was at 11.5%, while the trend of the index is expected to be
32
increasing until 2012 and rise to 14.5% in 2011 and 15.0% in 2012. Going forward, a gradual improvement of the
index is projected with an unemployment rate at 14.5% in 2013, 14.0% in 2014 and 13.6% in 2015.
Inflation: In 2010, inflationary pressure on the economy was intense with the General Consumer Price Index (CPI)
increasing by 4.7% during the year. For the following years, it is estimated that inflationary pressure will gradually
decrease with inflation estimated at 2.9% in 2011, 1.0% in 2012, 1.1% in 2013, 1.0% in 2014 and 0.9% in 2015.
A complete presentation of all macroeconomic indices for the period is included in table 2.1.
4.3.2
Assumptions for the wage bill projections of the General Government
The general government wage bill projections in the Medium-Term Fiscal Strategy 2011-2015, are based on certain
assumptions regarding the annual number of employee retirements, that result in estimates of the annual number of
personnel hiring (table 2.4), using 2010 as the reference year.
The assumptions on the number of retirements, (column 6) follow the conservative hypothesis of approximately 27,000
new pensioners [according to the measures that are described in the MTFS (scenario with measures) the total number
of pensioners during the period 2011-2015 is estimated at 150,000] per year for the General Government as a total. A
fiscal benefit is expected on the wage bill due to the fact that the average salary of a newly-hired employee equals,
approximately, to 75% of the respective salary of an employee near retirement. It is obvious that an additional fiscal
benefit will occur if the number of personnel retirements exceeds the above hypothesis.
In order to estimate the number of permanent personnel hiring per year, (columns 3 and 5) the rule of one hiring for
every five retirements is applied, according to the article 11 of Law 3833/2010. In the baseline scenario of the MediumTerm Fiscal Strategy, this rule has been applied for the entire period 2011-2015. Additionally, in applying the above
mentioned rule in the year 2011, the total number of personnel transfers from O.A., O.S.E. etc. to ministries and state
organizations, extra-budgetary funds and Local Government Agencies was also taken into account, following the
relevant guidelines of the Ministry of Interior, Decentralisation and E-government.
Based on estimates of retirements and hiring, as presented on table 2.4, the total number of permanent employees of the
General Government is estimated for the period 2011-2015 (Table 2.5, columns 2 and 3). The column 4 refers to a
fixed number of short-term contract employees for the same period, resulting from applying a reduction of 15% on the
respective number of the reference year 2010 (Law 3833/2010).
On Table 2.6 the total number of pensioners of the General Government is estimated based on the assumed retirements
of the respective year.
Table 2.4 Estimation of retirements and hiring of permanent personnel
of the General Government for the period 2011-2015
Year
Estimates of retirements
(state employees +
hospital and universities
personnel)
Estimates of new hiring
(state employees +
hospital and
universities personnel)
rule 1:5
Estimates of
retirements
(EBFs, SSFs and
LG)
Estimates of new
hiring
(EBFs, SSFs and
LG)
rule 1:5
Total number
of retirements
Total number of
new hiring
(1)
(2)
(3)
(4)
(5)
(6)
(7)
2011
15,000
5,600
5,000
930
20,000
6,530
2012
20,000
3,000
6,600
1,000
26,600
4,000
2013
20,000
4,000
6,600
1,320
26,600
5,320
2014
20,000
4,000
6,600
1,320
26,600
5,320
2015
20,000
4,000
6,600
1,320
26,600
5,320
Table 2.5 Estimates of the total number of employees
of the General Government for the period 2011-2015
33
Year
Estimates of the number
of permanent employees
(state employees +
hospital and universities
personnel)
Estimates of the
number of permanent
employees
(EBFs, SSFs and LG)
Estimates of the number
of contract employees
Total
(1)
(2)
(3)
(4)
(5)
2011
540,016
124,629
41,000
705,645
2012
523,016
119,029
41,000
683,045
2013
507,016
113,749
41,000
661,765
2014
491,016
108,469
41,000
640,485
2015
475,016
103,189
41,000
619,205
Table 2.6 Estimates of the total number of pensioners
of the General Government for the period 2011-2015
(1)
Estimates of the number
of pensioners
(state employees +
hospital and universities
personnel)
(2)
(3)
(4)
(5)
2011
371,178
62,068
8,500
427,246
2012
391,178
68,668
8,500
451,346
2013
411,178
75,268
8,500
477,946
2014
431,178
81,868
8,500
504,546
2015
451,178
88,468
8,500
531,146
Year
4.4
Estimates of the
number of pensioners
(EBFs, SSFs and LG)
Number of deceased
Total number of pensioners
Fiscal adjustment measures that have been taken into account for the baseline scenario
The most important measures of fiscal management, the impact of which has been taken into account for the
formulation of the baseline scenario, both on the revenue and the expenditure side, refer to the following basic
categories of interventions:
Revenue
 Fiscal administration: increase of judicial fees, action plan to accelerate collection of tax arrears, acceleration of the
collection of fiscal fines,
 VAT: increase in rates, restructuring of categories, broadening of the tax base,
 Consumption taxes: Increase of the excise taxes, unification of the rates in the excise tax on diesel for heating and
moving purposes,
 Real estate taxes: Restructuring of the taxation of real estate, increase of the real estate objective values to approach
market prices, increase of real estate transfer taxes and parental donation taxation,
 Taxation of remuneration in kind (cars),
 Presumptive taxation of professionals,
 Gaming royalties and licenses,
 Special levy on profitable companies for 2011,
 Receipts from guarantees,
 Receipts from privatizations and
 Measures for the settlement of social security contributions, exploitation of real assets of SSFs, establishment of the
insurance coupon.
Expenditure
 Wages and pensions: reduction of new hiring beyond the 5:1 rule, abolishment of special allowances, pension
freeze, reduction of the solidarity allowance, reduction of the special allowances in pensions, rationalization of
pensions,
34





4.5
Reduction of intermediate consumption,
Further reduction of operational expenditure per 5%,
Reduction of domestically funded public investment spending,
Cut in transfers to public enterprises and
Reduction in the pharmaceutical expenditure of SSFs.
Baseline scenario for the period 2011-2015
The baseline scenario for the Medium Term Fiscal Strategy (MTFS) represents the main framework for the medium
term fiscal projections of the General Government and its sub-sectors, for the period 2011-2015.
The baseline scenario includes the evaluation of the macroeconomic developments and prospects for the fiscal
aggregates, including results for the two previous years (2009-2010), estimates for the current year (2011), the budget
year (2012) and the next three years (2013-2015). It is based on the fiscal result of 2010, while only the fiscal
adjustment measures that had been legislated by December 2010 are taken into account, irrespectively whether their
yield covers the whole period of the projections.
The baseline scenario has been formulated both in the accounting basis of the annual State Budget (cash basis) and the
accounting basis of the European System of Accounts of 1995 (ESA 95).
In table 2.7, there is a detailed presentation of the baseline scenario on the development of the deficit. It also reflects
changes in revenue because of the changes in the tax base and macroeconomic developments (growth rate, inflation).
Table 2.7 Baseline Scenario 2011-2015 (cash and ESA basis)
(in mn euros)
2009
Ι. Revenues
1. Net revenues (a+b-c)
a. Recurrent/ordinary revenues
1.Direct taxes
2.Indirect taxes
3. Transfers from EU
4. Non-tax revenues
b. One-off revenues
c. Tax refunds
2. Public investment Budget revenues
a. EU flows
b. Other revenues
c. Own revenues
ΙΙ. Expenditure
1. Total ordinary spending (1+2+3+4+5+6)
a. Total ordinary primary spending
1. Remuneration and pensions
2. Insurance and Healthcare
3. Operating and other expenditure
4.Earmarked spending
5. Non Allocated Expenses
6. Reserve
b.1. Guarantees of PEs reclassified to General Government
2. Guarantees of PEs remaining outside Gen. Government
c. Interest expenditure
d. Transfers to hospitals for settlement of past debt
e. Payments for military procurements
2. Public Investment Budget expenditure
ΙΙΙ. State Budget Balance
% GDP
ΙΙΙ.a. Primary State Budget Balance
ESA95 adjustments for central government
Public entities Balance
Reclassified Public Corporations
ESA95 Central Government Balance
2010
2011
2012
2013
2014
2015
Actuals
Actuals Estimates Projections Projections Projections Projections
50,585
48,545
52,307
21,431
28,293
264
2,319
1,190
4,952
2,040
1,734
123
183
84,215
74,627
58,043
24,487
17,779
9,326
6,452
0
0
484
100
12,325
1,498
2,175
9,588
-33,630
-14.3%
-21,305
54,259
51,187
54,383
20,223
31,043
320
2,797
1,786
4,982
3,072
2,634
167
271
75,690
67,243
51,656
22,139
15,747
8,107
5,663
0
0
827
145
13,223
375
1,017
8,447
-21,431
-9.3%
-8,208
55,501
51,579
53,280
19,144
29,657
185
4,294
2,099
3,800
3,922
3,192
530
200
81,389
72,889
53,468
22,018
17,784
7,773
5,312
0
580
1,245
224
16,002
450
1,500
8,500
-25,888
-11.5%
-9,886
54,591
49,987
51,727
16,961
30,245
148
4,373
1,957
3,697
4,604
3,616
788
200
81,277
72,777
52,375
21,585
16,308
7,906
5,116
50
1,410
1,518
134
16,900
350
1,500
8,500
-26,686
-11.7%
-9,786
54,814
50,026
52,172
17,114
30,834
165
4,059
1,600
3,746
4,788
3,842
746
200
86,483
77,983
53,493
21,622
17,316
7,865
5,230
50
1,410
1,979
211
20,500
300
1,500
8,500
-31,669
-13.4%
-11,169
54,397
50,555
52,728
17,339
31,447
174
3,768
1,627
3,800
3,842
2,910
732
200
88,423
79,923
52,660
21,673
16,304
7,969
5,208
100
1,405
1,024
139
24,400
300
1,400
8,500
-34,026
-14.0%
-9,626
54,859
51,223
53,801
17,623
32,101
176
3,901
1,280
3,858
3,636
2,730
706
200
92,956
84,456
53,053
21,729
16,514
7,805
5,235
100
1,670
1,636
67
28,000
300
1,400
8,500
-38,097
-15.1%
-10,097
-528
-4,145
458
-1,646
-1,816
-1,678
-1,584
647
-1,593
878
3,059
997
1,211
754
1,368
660
1,866
622
859
793
1,385
-35,104
-21,638
-23,222
-26,209
-30,959
-34,223
-37,503
35
27
-158
-131
-379
-186
-565
-564
225
-339
-732
223
-509
-702
313
-389
-711
0
-711
-722
0
-722
393
-1,466
-1,074
369
-2,357
-1,988
787
-778
9
-631
-150
-781
638
-200
438
1,539
-200
1,339
2,242
-200
2,042
ESA95 General Government Balance
% GDP
-36,308
-15.4%
-24,191
-10.5%
-23,552
-10.4%
-27,499
-12.0%
-30,909
-13.1%
-33,595
-13.8%
-36,183
-14.4%
GDP
235,017
230,173
225,400
228,400
235,500
242,900
251,900
Local Government Balance
Local Government ESA95 adjustments
ESA95 Local Government Balance
Social Security Funds Balance
Social Security Funds ESA95 adjustments
ESA95 Social Security Funds Balance
Note: The accrual adjustments or ESA adjustments are basically corrections of fiscal aggregates in cash basis (as in the budget) in order to depict them according
to ESA95 methodology.
It is noted that the general government deficit is presented according to the ESA95 methodology.
Accrual adjustments mainly refer to:
-redistribution of fiscal aggregates over the years so that they are recorded in the year they were created independent of the cash recording.
-methodological corrections (differences between national accounting system and ESA95).
-corrections regarding financial transactions (buy-sale of stocks etc.).
The increase of the deficit for the period 2011-2015 with the sole impact of the measures already undertaken (and
without any additional) is due to the deficit drift, which includes the structural increase of the expenditure for wages
and pensions, due to maturity, the increase of the expenditure for interest payments and other structural changes on the
expenditure side of the central government and the sub-sectors of the general government.
The formation of deficits of year 2012 (budget year), as well as that of the period 2013-2015 are presented in table 2.7
both in central and general government levels.
The assumption of not taking measures implies the maintenance of deficits for the whole period at the levels of 10.4%14.4% of GDP and the derailment of the debt up to 198.9% of GDP. There is also a relevant sharp increase of interest
payments from 16 bn euros in 2011 to 28 bn euros in 2015.
Such a scenario of not taking measures cannot be the government’s, neither the country’s choice, since, otherwise it
would lead to the exclusion of our country from the global markets and, eventually, to the negative impact to the Greek
economy.
In table 2.8, there is a detailed presentation of the annual fiscal gap between the deficit projections and the fiscal
targets.
Table 2.8 Fiscal gap per year for the period 2011-2015
(mn euro)
2009
ESA 95 General Government deficit
% GDP
2010
Actual
-36,308
Actual
-24,191
-15.4%
-10.5%
2011
2012
2013
2014
2015
Estimate
-23,552
Estimate
-27,499
Estimate
-30,909
Estimate
-33,595
Estimate
-36,183
-10.4%
-12.0%
-13.1%
-13.8%
-14.4%
-17,065
-14,916
-11,399
-6,385
-2,991
Fiscal gap
-7.6%
6,487
-6.5%
12,584
-4.8%
19,510
-2.6%
27,210
-1.2%
33,583
% GDP
2.9%
5.5%
8.3%
11.2%
13.3%
225,400
228,400
235,500
242,900
251,900
ESA 95 General Government deficit (Targets)
% GDP
GDP
235,017
230,173
Respectively, under the same assumption of not taking any additional measures, the development of the central
government debt shows a rapid evolution, arriving to 198.9% of GDP in 2015, raising further issues relating to the
credibility of the Greek economy and putting under serious risk the creation of the appropriate conditions for Greece to
return to the international capital markets as soon as possible. Even more significant is the increase of interest
payments, arriving to 28,000 mn euros or 11.1% of GDP in 2015.
36
The development of public debt based on the above scenario on deficit drift is analyzed in table 2.9:
Table 2.9 Development of general government debt according to the baseline scenario
2009
2010
2011
2012
2013
2014
2015
General government debt
298,706
328,587
364,105
399,253
432,378
465,614
501,078
GDP
235,017
230,173
225,400
228,400
235,500
242,900
251,900
General government debt as % GDP
127.1%
142.8%
160.6%
174.8%
183.6%
191.7%
198.9%
2014
2015
Respectively, central government interests on cash and on accrual basis have as follows:
Table 2.10 Central government interest payments (baseline scenario)
2009
2010
2011
2012
2013
Interests on cash basis
12,325
13,223
16,002
16,900
20,500
24,400
28,000
Interests on accrual basis (ESA 95)
12,490
13,945
15,559
18,900
22,800
26,900
30,900
Interest payments on accrual basis % of GDP
5.3%
6.1%
6.9%
8.3%
9.7%
11.1%
12.3%
Difference cash-accrual interests
(ESA adjustments)
-165
-722
443
-2,000
-2,300
-2,500
-2,900
Note:
4.5.1
For the projection of interest payments the following assumptions have been made:
a) The weighted average fixed coupon for all new bond issuance for the years 2012, 2013, 2014 and 2015 is estimated at 7.5%.
b) Nominal interest rates are based on forward rates prevailing 1st June 2011.
Comparison of budgeted aggregates and estimates for the year 2011
The budget of 2011 aimed at continuing the rapid reduction of the deficit, in the framework of an ambitious mediumterm plan of fiscal adjustment and economic growth, towards the ultimate target of the effective decrease of deficit at
levels below 3% of GDP in 2014. In particular, 2011 budget projects the general government deficit at 16,833 mn euro
(7.4% of GDP). Main pillars of the effort to achieve the above goal are the further rationalization of expenditure and
the improvement of the performance of revenues.
Table 2.11 Baseline Scenario-Comparison of budget and estimates 2011
2011
Budget
State Budget
Ι.Revenues (1+2)
1. Net revenues (a+b-c)
a. Recurrent/ordinary revenues
b. One-off revenues
c. Tax refunds
2. Public investment Budget revenues
ΙΙ. Expenditure (1+2)
1. Total ordinary spending (a+b+c+d+e)
a. Total ordinary primary spending
1. Remuneration and pensions
2. Insurance and Healthcare
3. Operating and other expenditure
4.Earmarked spending
5. Non Allocated Expenses
6. Reserve
b.1. Guarantees of SOEs reclassified to General Government
2. Guarantees of SOEs outside General Government
c. Interest expenditure
d. Transfers to hospitals for settlement of past debt
e. Payments for military procurements
2. Public investment Budget expenditure
ΙΙΙ. State Budget Balance (I-II)
% GDP
ΙΙΙ.a. Primary State Budget Balance (III-II1c)
% GDP
IV. Balance of LGOs, SSFs and other PLEs
Public Legal Entities
Local Government
SSFs
Accounts Payable SSFs
59,482
55,560
57,520
1,840
3,800
3,922
80,339
71,839
52,673
21,593
16,652
7,870
5,978
0
580
1,051
145
15,920
450
1,600
8,500
-20,857
-9.1%
-4,937
-2.2%
1,491
230
500
700
-239
Estimates
55,501
51,579
53,280
2,099
3,800
3,922
81,389
72,889
53,468
22,018
17,784
7,773
5,312
0
580
1,245
224
16,002
450
1,500
8,500
-25,888
-11.5%
-9,886
-4.4%
1,877
997
-339
248
-239
Difference
Difference
(% GDP)
-3,981
-3,981
-4,240
259
0
0
1,051
1,051
795
426
1,132
-97
-666
0
0
194
79
82
0
-100
0
-5,032
-1.8%
-1.8%
-1.9%
0.1%
0.0%
0.0%
0.5%
0.5%
0.4%
0.2%
0.5%
0.0%
-0.3%
0.0%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
-2.2%
-4,949
-2.2%
386
767
-839
-452
0
0.2%
0.3%
-0.4%
-0.2%
0.0%
37
Reclassified Public Corporations
V. Payments to third parties through bonds
VI. ESA95 adjustments
VII. ESA95 General Government Balance (III+IV+V+VI)
% GDP
VIII. Target of general government balance based on
program(1)
% GDP
GDP
(1)
300
-420
2,953
-16,833
-7.4%
1,211
-420
878
-23,552
-10.4%
911
0
-2,075
-6,720
-17,065
-7.6%
-23,552
-10.4%
225,400
-6,487
2.9%
0.4%
0%
-1.5%
-3.0%
In the above table there is a comparison between the original forecast for the general government balance as presented in the 2011 budget (-16,833) and the general
government balance as it had been set for 2011 in the framework of the fiscal effort undertaken in the period 2011-2015 (-17,065).
The budget estimates of 2011 were however based on the projected figures of the year 2010, as they were formulated
during the budget drafting period, that is 7 months earlier, in November 2010. Yet, actual annual budget data for the
year 2010, as well as macroeconomic aggregates presented deviations in comparison to initial estimates.
The Government’s will is the MTFS to be planned on an absolutely realistic basis, by incorporating all latest
information and developments that would be available at the moment of its elaboration. As a result, it is necessary that
the MTFS is based on the actual data about 2010 budget execution and the fiscal result that was announced by
ELSTAT (deficit at 10.5% of GDP instead of the budgeted at 9.4%), which leads to the revision of the estimates for the
year 2011. Consequently, the baseline scenario for the MTFS incorporates the assumption that general government
deficit for 2011 will be at 17,065 mn euro (7.6% of GDP).
According to MTFS, achieving the targets of the program of the economic policy of 2011 requires additional fiscal
effort of 6.48 bn euros. This effort is needed in order to suspend the negative impact of a certain number of factors
(table 2.12) such as:




The impact of the revised, due to recession, general government deficit of 2010 by a percentage unit (2.5 bn euros),
The negative impact of the larger than the expected recession (1 bn euros),
The loss of revenues due to initiatives taken to decrease tax revenues and enhance economic activity (1.7 bn euros)
Re-evaluation of measures performance by 1.2 bn euros
Table 2.12 Additional fiscal effort 2011
(in bn euros)
Impact of the revision of the 2011deficit of general government
2.5
Impact of the larger recession
1.0
Initiatives of decreasing tax revenues
1.7
Re-evaluation of measures performance by 1.2 bn euros
1.2
Total
6.4
The fiscal effort of 2011 is based on the new estimate of the 2010 general government deficit. At a higher starting point
of 10.5% for 2010 instead of 9.4% recorded in the 2011 budget report, new measures of equivalent fiscal impact are
needed.
Furthermore, recession is a little bit larger than the one that had been reported in the program of economic policy and
especially the last quarter of 2010 reached 7.4%. This also affects 2011, as tax revenues and social contributions are
decreased and social benefits are increased i.e. unemployment benefits. It is estimated that the impact of recession on
the deficit of 2011 is about 1 bn euros.
In parallel, during 2011 there have been additional measures to reduce direct tax burden that have relieved citizens and
the liquidity of the economy. More specifically these measures are:



1,000 mn euros by the implementation of the clearing of debts which also boosts the market,
300 mn euros by the payment of VAT in installments, which facilitates the liquidity in the market,
400 mn euros by the decrease in income tax due to the new tax scale for income below 40,000 euros.
The overall impact for 2011 from initiatives decreasing tax revenues and enhancing economic activity amounts at 1.7
bn euros.
Also, the yield of several measures in the 2011 budget has been re-estimated. More specifically, the revenues estimate
has been revised downwards by approximately 2 bn euros as follows:
38






200 mn euros from gaming royalties,
150 mn euros from the postponement of the increase in real estate objective values, in order not to cause further
problems in the housing market,
100 mn euros from not broadening the VAT base at the beginning of 2011,
770 mn euros from the accounting recording of concessions (telecommunications licenses, International Athens
Airport and OPAP concessions) in later years and not as deficit reducing in 2011,
200 mn euros from the inflow-outflow system in fuel,
500 mn euros from several other measures (savings from local government etc.).
Finally, there is an estimate for increased revenues by 800 mn euros from measures that had a better yield than
projected:
 300 mn euros from taxation of unauthorized establishments,
 300 mn euros from voluntary resolution of tax disputes,
 200 mn euros from other measures, such as the reduction of the tax rate on non distributed profits for enterprises
from 24% to 20% that will have a major effect in 2012.
In general government revenues and expenditure terms, the discrepancy from the 2011 target (table 2.11) can be
explained as follows:
On the revenues side, there is an estimate for less revenues by 3,981 mn euros (1.8% of GDP) in comparison to the
corresponding 2011 forecasts. The main causes for this revision are the following:




The low personal income tax revenues in comparison to the estimates for 2010, because of the lower tax base in
2010 and the relief caused by the new tax scale, in combination with the negative economic results of the first
quarter of 2011, lead to a downward revision for the 2011 forecasts by 1,631 mn euros in comparison to the
original ones.
The significant shortfall of VAT revenue in comparison to the 2010 estimates, because of the economic activity
recession, the lower tax base in 2010 and the downward revision of macroeconomic indices, leads to a downward
revision of 2011 forecasts by 926 mn euros in comparison to the budget.
The economic results of the first quarter for excise taxes on fuel and tobacco lead to more conservative forecasts
for 2011 with regard to the quantities that will be consumed and, therefore, to a downward revision of 2011
forecasts for these specific revenues by 982 mn euros.
Reduced 2011 drawings from EU by approximately 155 mn euros.
On the side of the ordinary budget expenditure for social security and healthcare there is a discrepancy of 1,132 mn
euros that is attributed to increased grants to IKA (600 mn euros) due to its lower revenues, to increased grants to
OAED by 500 mn euros for unemployment benefits and compensations (64 mn euros) to former personnel of Olympic
Airways, to guarantees called (272 mn euros) and finally to interest expenditure by 82 mn euros. On the other hand,
operating and other expenditures are reduced by 97 mn euros and earmarked revenues by 666 mn euros. It is noted that
the overshooting of 426 mn euros in salaries and pensions is due to: a) the wage bill of personnel (392 mn euros) of
regions (former prefectural administrations) which in the budget had been included in earmarked revenues and b) the
wage bill of ELSTAT (36 mn euros) which had been included in grants. Finally from the fiscal adjustment of interest
payments from a cash basis to an accrual basis (according to ESA 95) the deficit is increased by approximately 320 mn
euros.
39
CHAPTER 3
THE MEDIUM TERM FISCAL STRATEGY
1.
FISCAL STRATEGY AND POLICIES
The exit of the Greek economy from the fiscal crisis is, at present, the focus of discussion in political, social and
academic groups.
The strategy and policies for reaching these targets may be a point of conflict, however, everyone recognizes that the
fiscal targets set by the government consist the only but also recommended options for the salvation of the country.
These objectives, simple and clear, that are set for the first time in a medium-term program, the Medium Term Fiscal
Strategy, are:





The control and restraint of the drift dynamics of the high public debt (debt sustainability).
The fiscal consolidation, so that initially the deficit of the General Government decreases to 1% of GDP until 2015
and later primary surpluses are accumulated.
The creation of permanent and robust growth conditions, so that the nominal growth rate of GDP exceeds 3% from
2012 onwards and keeps the positive trend by remaining, in the long term, at an average of at least 5%.
The social protection and equality as well as the symmetric contribution of all social groups to the effort for fiscal
consolidation.
The state asset management which, combined with the fiscal consolidation efforts, will contribute to the reduction
of debt.
The fiscal strategy and policies, suggested by the Government, are defined and supported by the same economic
variables that affect the above mentioned targets.
1.1
Controlling and retaining the increasing trend of the debt
The large public debt, in absolute numbers and as a percentage of GDP, is at present the major fiscal issue of the
country. Its control and containment is a prerequisite for the necessary return of Greece to international capital markets
in order to finance the debt and further growth.
This target is a serious challenge in the next few years, since debt sustainability and limitation of its dynamics should
be ensured.
General Government debt, 2011 (% GDP)
160,6
120
101 107
51 52 57
43 43 45 45 47
33 39
9
87 87 89
80 82 83
72 76
65 67 70 71
20 20
Lu
Es
t
xe oni
a
m
bo
ur
Bu g
lg
a
Ro ria
m
an
Sw ia
e
Li den
th
ua
Cz
n
ec ia
h
Re
Sl
p
o
Sl ven
ov
i
ak a
R
D
en ep
nm
a
F i rk
nl
an
d
La
tv
ia
Po
la
Th
nd
C
e
yp
N
et
he rus
rla
nd
s
Sp
ai
n
M
al
t
Au a
s
G tria
er
m
a
Hu ny
ng
ar
U
y
ni
te
EE
d
-2
K
7
in
gd
Eu om
ro
zo
n
Fr e
an
Po ce
rt
ug
Be al
lg
iu
m
Ire
la
nd
It a
G ly
re
ec
e
160
140
120
100
80
60
40
20
0
40
The realistic strategy for the reduction of debt is the one dictated from fiscal variables that define debt dynamics, such
as the primary surpluses, undertaking of new obligations and interest payments (see box).
Moreover, the rate of economic growth should be so high as to ensure not only the sustainability of public debt, but
also a satisfactory rate of debt reduction to below 100% of GDP within an acceptable, by the markets, time framework.
The sustainability of Public Debt
The debt-to-GDP ratio is defined by two variables: a) the amount of debt and b) the GDP, i.e.
the growth rate.
The level of debt is affected by its annual rate of change, which according to the national
accounts methodology is defined by a series of variables:
ΔD = PB+ I + NO
Where ΔD = the annual rate of change in debt
PB = the primary budget balance excluding interest payments
I = the annual interest payments
NO= new obligations that are not projected in the budget
Given that the interest payments and new obligations undertaken are both deficit soaring
factors thus increasing the debt, there must be sufficient primary surpluses, that will at a first
stage partially diminish this negative effect (i.e. the debt will increase but at a lower rate), and
gradually they will reverse it (the debt will decrease).
On the other hand, the debt to GDP ratio, suggests that when the implicit interest rate1 of debt
exceeds the growth rate, the debt to GDP tends to be self-sustained, since the interest
payments contribute more to public debt than growth contributes to GDP. Therefore, policies
should be pursued that generate large primary surpluses and high growth rates. The more the
fiscal adjustment is delayed, the higher is the debt to GDP ratio thus limiting the potential for
corrective action.
_________________________________________
1
The implicit interest rate is estimated as the ratio of interest of period n to the amount of debt on the 31/12 of the
year n-1.
A basic element of the government policy is also to put limits on new commitments, that are due to:
 The pressure for economic benefits from groups with strong political, social or union power.
 Incorrect political or management policies.
 The creation of deficits by the sub-sectors of the General Government, mostly through structures that favor
mismanagement.
41
1.2
The fiscal consolidation
The objective of government policies is the creation of primary surpluses of 6% of GDP from 2014 onwards, thus
implementing measures that aim at a) increasing revenues and b) reducing expenses.
Primary balance of General Government (% of GDP)
7,0%
8%
6%
4%
2%
0%
4,0%
2,0%
-2%
-4%
-6%
-8%
-10%
-12%
-1,4%
-0,8%
-2,0%
-4,5%
-4,7%
-10,3%
2006
2007
2008
2009
2010
2011
2012
2013
2014
The revenues increase requires:



Building strong conditions for the development of the economic activity of the country
Establishing a fair and effective tax system and
Combat against tax evasion
On the other side, the expenses reduction demands:



Reduction and rationalization of operational expenses of the state and sub-sectors of the General Government,
reduction of the presence of the state as a percentage of total activity and
transparency in the management of public resources.
In 2010, the Greek economy achieved a reduction of its fiscal deficit by 5 percentage points of GDP or 12.1 bn euro.
The primary deficit in 2010 decreased by almost 5.6 percentage points of GDP.
General government deficit 2006-2015
40
18%
36,3
Deficit (bn euro)
35
14%
15,4%
30
25
23,1
20
9,8%
12%
24,2
10,5%
10%
17,1
12,1
10
5,7%
8%
14,9
14,5
15
7,6%
6,4%
6,5%
11,4
4,8%
5
6%
4%
6,4
2,6%
2,6
1%
0
2006
1.3
16%
Deficit (% GDP)
2007
2008
2009
2010
2011
2012
2013
2014
2%
0%
2015
The creation of permanent and robust growth conditions
Under the current economic situation, the perspectives for international growth, especially in the eurozone are limited.
The international market volatility, affecting particularly the regional economies, will most probably remain.
42
The creation of permanent and robust growth conditions for our country where the largest part of economic activity is
based on the tertiary sector, i.e. trade and services, while the industrial activity is limited to light industry, requires a
complex strategy exploiting the competitive advantages of the economy.
The recession in Greece for 2011 is expected to be lower than in 2010 (-3.5% versus -4.5% in 2010). The Greek
economy is expected to return to positive growth rates in 2012.
Evolution of GDP and CPI
% real GDP
6,0%
CPI
4,7%
4,0%
2,0%
% nominal GDP
2,9%
1,1%
1,1%
1,1%
2,1% 3,1%
2,1% 3,1%
2,7% 3,7%
2013
2014
2015
1,0%
0,9%
0,0%
-2,0%
-1,1%
-2,0%
0,8% 1,3%
-2,0%
-4,0%
-2,1%
-3,5%
-4,5%
-6,0%
2009
2010
2011
2012
Obviously, it is impossible for the country to exit the financial crisis and avoid a deep and prolonged recession, without
achieving robust growth.
The rationalization of the magnitude of state demands a) the consistent implementation of the economic program in the
context of the Medium Term Fiscal Strategy, b) the restoration of national and international confidence and credibility
and c) the inflow of foreign capital.
Capital inflows can be achieved through the exports increase, the attraction of international investment funds and,
finally, the faster absorption of the funds of NSRF.
The prerequisite for exports increase is:
 the strengthening of the competitiveness of the country, thus leading to the increase in the productivity of the
labour force and the creation of incentive for new investments,
 the improvement in the quality of the products produced and
 the provision of the necessary liquidity from the banking system to the private sector.
The attraction of international investment funds demands:
 the removal of regulatory barriers to entrepreneurship (Fast track licensing procedures-Investment Law),
 the revocation of distortion in the market conditions through the creation of more flexible labour relations, the
liberalisation of services and the deregulation of closed professions,
 the existence of a simple, effective and solid tax framework,
 the design of development policies for specific sectors as tourism, retail, energy, culture,
 the provision of the necessary liquidity from the banking system to the private sector and
 the cautious planning of a privatisation programme and public asset management.
1.4
The management of the property of the Greek Public Sector - privatizations
For the first time, an attempt is made to record and manage one of the largest but also least profitably used elements of
the State Assets through the planning and implementation of a substantial program of privatizations and state asset
management.
1.4.1
Policy Overview for State Asset Management 2011 – 2015
43
The portfolio of state-owned assets of the Hellenic Republic (HR) consists of four major classes: Enterprises,
Infrastructure, Monopolistic Rights and Real Estate. The government policy intends to strategically manage the
portfolio of state-owned commercial assets through the optimization of the tradeoffs between risks and financial returns
and the accommodation of operational efficiency. In this respect, the strategic asset management is based on the
principle of flexible utilisation of private expertise and capital on state owned assets, whilst securing the interests of the
State in a specified number of them.
The Government’s privatization program focuses on the period 2011-2015, with a view to generate revenues of 5
billion euro in 2011, 15 billion euro cumulatively until 2012 and 50 billion until 2015. The derived nominal revenues
can reduce public debt up to 20 percentage points of GDP, thus contributing not only to its sustainability, but also the
significant reduction of the interest burden.
The table 3.1 summarises the privatisation program for the period 2011-2015. In summary, the privatisation program
for the period 2011-2015 includes transactions regarding HR interests in a number of key sectors such as: Banking,
Energy, Gaming, Telecoms, Ports, Airports, Motorways, Railways, Mining, Water and Waste Management, Defence
Industries and Real Estate.
The government will present initiatives to exploit the property of the State, which include the completion of registration
by the end of 2012, as well as legislation on the surface rights and long-term leases, holiday homes, land uses and clear
property titles until August 2011.
The HR proceeds immediately to the creation of the Agency for Privatization (National Wealth Fund) to promote rapid,
effective and transparent implementation of the 5-year program of management and use of public assets.
Specifically, the Fund will obtain ownership of marketable assets of HR as presented in Table 3.1 in order to privatize
them (shareholdings, rights and marketable public property). The assets managed by the General Secretariat of Public
Property belonging to the public domain, are excluded from the trading activity of the Fund. The Fund, which will be
covered by Greek law, will be staffed by persons of proven training and experience in the field of privatization, and its
administration will have the approval of Parliament, which will receive regularly a report of its activities as for the
stage of development of each asset. The European Commission and the Member States of the Eurozone can designate
two observers who will not participate in the management of the Fund.
The Fund will be transferred shares and rights of the assets to be privatized in order to proceed to their development in
an open and transparent process, based on prevailing market conditions. The Fund will be able to raise money through
borrowing or collateral that would not prevent the rapid and efficient divestiture of the assets transferred. There will be
no possibility of a retransfer of the assets of the Fund, as the net revenue generated will be reimbursed to Treasury for
debt reduction.
The sector and asset decomposition of the HR’s privatisation program, together with the relevant expected timeframe
and structure of the privatisation transactions is given below.
Table 3.1 Privatisation Program 2011-2015
Year
Name
Expected
Date
State’s share
Participation
to sell
Type of transaction
2011
Hellenic Telecommunications Organisation (OTE)
Thessaloniki Water Supply and Sewerage Company (EYATH)
Athens International Airport (AIA)
Hellenic Football Prognostics Organisation (OPAP) 1
Hellenic Football Prognostics Organisation (OPAP) 2
Thessaloniki Port (OLTH)
State Lotteries
Piraeus Port (OLP)
Hellenic Defence Systems (EAS)
Hellenic Postbank (TT)
Public Gas Corporation (DEPA)
National Natural Gas System Operator (DESFA)
Railway Operator (TRAINOSE)
Q2
Q3
Q3
Q3
Q3
Q3
Q3
Q4
Q4
Q4
Q4
Q4
Q4
16.0%
74.0%
100.0%
100.0%
100.0%
74.3%
100.0%
74.1%
99.8%
34.0%
65.0%
65.0%
100.0%
10.0%
 40%
23.3%
100.0%
23.1%
99.8%
34.0%
55.0%
31.0%
100.0%
Sale of shares
Sale of SPV shares
Concession extension
Concession extension
New gaming licenses
Sale of shares
Sale of shares
Sale of SPV shares
Sale of shares
Sale of shares
Sale of shares
Sale of shares
Sale of shares
44
Larco
Alpha Bank
National Bank of Greece
Hellenic Horse Racing Company (ODIE)
Mobile Telephony Licenses
Casino Mont Parnes
Hellenic Vehicle Industry (ELBO)
Hellenic Football Prognostics Organisation (OPAP)
Hellinikon 1
Four Airbus Aircraft
Real Estate Assets 1
Q4
Q4
Q4
Q4
Q4
Q4
Q4
Q4
Q4
Q4
Q4
55.2%
0.6%
1.2%
100.0%
100.0%
49.0%
72.6%
34.0%
100.0%
100.0%
100.0%
55.2%
0.6%
1.2%
100.0%
100.0%
49.0%
72.6%
34.0%
100.0%
-
Sale of shares
Sale of shares
Sale of shares
Sale of shares
Concession extension
Sale of shares
Sale of shares
Sale of shares
Sale of SPV shares
Asset sale
Sale of SPV shares
Athens International Airport (AIA)
Hellenic Petroleum (ELPE)
Piraeus Bank
Agricultural Bank of Greece (ATE)
Egnatia Odos Motorway
Hellenic Post (ELTA)
Ports 1
Athens Water Supply and Sewerage Company (EYDAP)
Loan and Consignment Fund (LCF)
Real Estate Assets 2
Public Power Corporation (PPC)
Hellenic Motorways 1
Regional Airports 1
Hellinikon 2
Real Estate Assets 3
Digital Dividend 1
Thessaloniki Water Supply and Sewerage Company (EYATH)
Hellenic Goldmines 1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q2
Q2
Q2
Q3
Q3
Q3
Q4
Q4
Q4
Q4
Q4
55.0%
35.5%
1.3%
77.3%
100.0%
90.0%
100.0%
61.3%
100.0%
100.0%
51.0%
100.0%
100.0%
100.0%
100.0%
100.0%
34.0%
100.0%
 21%
35.5%
1.3%
26.2%
100.0%
 40%
100.0%
27.3%
100.0%
100.0%
17.0%
100.0%
100.0%
100.0%
Sale of SPV shares
Sale of shares
Sale of shares
Sale of shares
Sale of SPV shares
Sale of shares
Sale of SPV shares
Sale of SPV shares
Sale of SPV shares
Sale of SPV shares
Sale of shares
Sale of SPV shares
Sale of SPV shares
Sale of SPV shares
Sale of SPV shares
Sale of rights
Sale of SPV shares
Sale of SPV shares
Offshore Gas Storage Facility
Regional Airports 2
Ports 2
Real Estate Assets 4
Hellenic Goldmines 2
Digital Dividend 2
Athens Water Supply and Sewerage Company (EYDAP)
Hellenic Motorways 2
Q1
Q2
Q2
Q3
Q3
Q4
Q4
Q4
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
34.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Sale of SPV shares
Sale of SPV shares
Sale of SPV shares
Sale of SPV shares
Sale of SPV shares
Sale of rights
Sale of SPV shares
Sale of SPV shares
Hellenic Motorways 3
Real Estate Assets/Land
100.0%
100.0%
100.0%
-
Sale of SPV shares
Sale of SPV shares
Hellenic Motorways 4
Real Estate Assets/Land
100.0%
100.0%
-
Sale of SPV shares
Sale of SPV shares
2012
100.0%
2013
2014
2015
Q1:1st quarter, Q2: 2nd quarter,
Q3: 3rd quarter,
Q4: 4th quarter
1.4.2
Infrastructure and Transport

OSE: Train Operator, Train Stations, Freight Centers, Rolling Stock Maintenance
The State holdings consist of 100% of OSE Group (OSE S.A., EDISY S.A., ERGOSE S.A. and GAIAOSE S.A.) and
100% of TRAINOSE S.A.
The privatisation process is based on a restructuring plan which is expected to yield assets of investment quality within
2011. In particular the restructuring plan underway aims to ensure TRAINOSE’s viability, cost rationalization in the
infrastructure manager OSE and EDISY and to effectively manage and develop OSE real estate through its subsidiary
GAIAOSE S.A.
TRENOSE, the Greek Train Operator, is currently subject to a major restructuring plan, leading to its privatisation. The
HR is planning to sell the company to a strategic partner during 2011, and to assign to such partner the management of
the company through a shareholders’ agreement. Moreover, OSE’s business unit of rolling stock maintenance will
become an OSE subsidiary (ROSCO) and will be privatised. Finally, the HR shall proceed to the development of
OSE’s main railway stations through concession agreements. The relevant privatization transactions are expected to be
concluded within Q4 of 2011.

Athens International Airport (AIA)
45
AIA, is a 30-year concession company (expiring June 2026) responsible for the construction, financing, operation and
maintenance of the Athens International Airport “Eleftherios Venizelos” since 1995 through a concession agreement.
The HR holds 55%, while Ηochtief holds 40% and a private investor 5%.
The HR promotes the extension of the Concession duration in Q3 2011, as well as the sale of at least 21% of its stake
in Q1 2012 through either IPO or trade sale.

Regional Airports
The regional airport sector in Greece consists of 29 peripheral airports, among which Thessaloniki, Heraklion, Rhodes,
Corfu, Chania, Kos, Zakynthos, Santorini, Mytilini and Chios. The regional airports are business units without any
corporate structure, supervised by the Hellenic Civil Aviation Authority (HCAA).
The government promotes in 2011 the gradual operational independence of the regional airports from the HCAA, as
well as their conversion to corporations (Societe Anonyme) and eventually their privatisation through concession
agreements with the private sector. Following such conversion, the HR will offer the shares of such company to the
private sector. The regional airport sub-portfolios will be formulated in Q3 2011 and offer mature transactions from Q3
2012 through Q2 2013.

4 Airbus A340-300 Aircrafts
The Hellenic Republic (HR) is in the process of disposing of four Airbus A340-300 aircrafts with MSNs 235, 239, 282,
292 (the Aircrafts). The Aircrafts are currently leased by the HR on finance leases and were sub-leased to Olympic
Airlines on operating leases until September 2009, date of closure for the privatisation process of Olympic Airlines.
Since then the Aircrafts are parked at the Athens International Airport. The tender process currently underway is
expected to be concluded by Q4 2011.

Egnatia Odos Motorway
The Egnatia Odos motorway (with a total length of approx. 650 km) was built on a public works basis and is currently
operated by a fully state owned company under the same name (EGNATIA ODOS SA).
During 2011 the HR will assign the operation, maintenance and toll rights to the private sector on a concession basis.
The HR is considering the alternatives of:
-
Creating a SPV in which it will assign the exclusive rights for the completion of any incompleted infrastructure on
the motorway, the operation, maintenance and toll collection for a specified time period and at a next step proceed
to the sale of the SPV to the private sector.
-
Implementing a tender process through which a concessionaire will be selected who will undertake the
abovementioned obligations and rights in the motorway for a specified period of time.
The transaction will be formulated in Q3 2011 and is expected be concluded in Q1 2012.

Hellenic Motorways Co
The HR is considering the creation of a Special Purpose Vehicle (Hellenic Motorways Co) in which:
i. the HR will incorporate its rights over future toll revenues, payable by the concession companies which have
undertaken the construction, financing, operation, toll collection and maintenance of the Greek motorways network
implemented by five concession agreements under construction:
- Maliakos-Kleidi section, forming part of the Athens-Thessaloniki motorway (concession company: Aegean
Motorway SA)
- Athens-Maliakos section, forming part of the Athens-Thessaloniki motorway and Antirrio-Ioannina motorway
(concession company: Nea Odos SA)
- Central Greece motorway (concession company: Kentriki Odos S.A.)
- Elefsina-Korinthos-Patra-Pyrgos-Tsakona motorway (concession company: Olympia Odos S.A.)
- Korinthos-Tripoli-Kalamata and Lefktro-Sparti motorway (concession company: Moreas S.A.)
ii. The HR will incorporate its rights over future toll revenues and operation & maintenance after the expiry of the
concession period of Rion Antirrion Bridge and the Athens Peripheral Road (Attiki Odos).
iii. The HR will incorporate any rights which may derive from future concessions that may decide to implement in
46
road transport infrastructure (including indicatively to Egnatia Odos Motorway and other).
The HR will proceed to the sale of its participation in the Hellenic Motorways Co or in its subsidiaries which will hold
rights on specific concessions, to private investor(s). A number of transactions will be formulated in Q3 and Q4 2011
and are expected to be concluded at regular intervals between 2012-2015.
1.4.3
Ports

Piraeus Port (OLP), Thessaloniki Port (OLTH), Regional and Other Greek Ports
The State portfolio includes twelve (12) ports that have the legal form of Societé Anonyme, namely Piraeus,
Thessaloniki, Volos, Igoumenitsa, Patra, Alexandroupoli, Heraklion, Elefsina, Rafina, Lavrio, Corfu and Kavala and a
plethora of other smaller ports with different legal forms. The HR currently owns 74% of the listed Piraeus and
Thesaloniki ports and 100% of the others.
Regarding the ports that operate as S.A., the government plan is to transfer to the private sector strategic stakes in
selected ports, during 2011-2013. The portfolio of ports will be reorganized in groups, thus involving a number of key
mergers. As far as Piraeus Port is concerned, a sale of 23.1% of HR’s stake will take place in Q4 2011. As far as
Thessaloniki Port is concerned, a sale of 23.3% of HR’s stake will take place in Q3 2011. Further sales of ports’ shares
will take place in Q1 2012 through the entry of strategic investors.
Furthermore, the HR will proceed to the study of other smaller regional ports with a view to promote the establishment
of an extensive system of groups of marinas in the form of S.A. which will subsequently be privatised on a concession
basis.
The regional port sub-portfolios will be formulated in Q3 2011 and offer mature transactions in Q2 2013.
1.4.4
Urban Water and Sewage Management

Athens Water Supply and Sewerage Company (EYDAP)
The Athens Water Supply and Sewerage Company SA (EYDAP), has the exclusive right to offer water supply and
sewerage services in the greater Attica area. This right is exclusive and non transferable. The duration of this right, as
well as its renewal, are regulated by an Agreement signed by the Hellenic Republic and EYDAP in December 1999 and
is valid for 20 years with the option of extension. Currently the HR holds 61% of the company’s share capital, while
10% belongs to the Agricultural Bank of Greece. The Government is planning to transfer a minority stake of 27.3% of
EYDAP to a strategic investor by Q2 2012, along with the creation of a water regulatory authority. A further
shareholding of the State is expected to be sold by Q4 2013, after the separation of the network from the transferred
service.

Thessaloniki Water Supply and Sewerage Company (EYATH).
Thessaloniki Water Supply & Sewerage SA (EYATH) has the exclusive right to provide water supply as well as to
collect and transfer urban wastewater to various treatment installations in the greater Thessaloniki urban area through a
30-year exclusive concession agreement with the HR, effective from July 2001. Currently the HR holds 74% of the
company’s share capital, while 5% belongs to Suez Environment Company and the rest is free floated. The
Government is planning the transfer of a minority stake of at least 40% of EYATH to a strategic investor by Q3 2011.
The remaining shareholding of 34% is expected to be sold by Q4 2012.
1.4.5
Gaming

Hellenic Casino of Parnitha S.A. (HCP or Mont Parnes)
HCP is the second largest casino in Greece. The HR via its wholly owned investment entity, Hellenic Tourism
Development S.A., controls 49% of HCP share capital while 51% belongs to the Athens Resort Casino S.A., an
investment vehicle of Regency Entertainment S.A. (70%) and Ellaktor S.A. (30%). Athens Report Casino S.A. and
Hellenic Tourism Development S.A. entered into a shareholders’ agreement in 2003 according to which both
47
shareholders enjoy a preference right of first refusal on any sale of HCP shares to a third party. In addition, Regency
has a management contract with HCP which is valid until 2013.
The HR promotes the full privatisation of HCP through the sale of its holdings by Q4 2011.

Hellenic Horse Racing Company (ODIE)
ODIE has the exclusive right to perform domestic horserace betting. In 2003 ODIE was relocated in Markopoulo
Attikis, in newly established facilities designed to serve the 2004 Athens Olympic Games. In order to finance its
relocation and the establishment of the new facilities ODIE used a long term bank loan of 210 mn euro, guaranteed by
the HR. The company is loss-making due to the service of the above mentioned loan and its decreasing turnover thus
facing liquidity problems which, along with the existing intense competition in the gaming sector and the low
penetration of the horse racing betting in Greece, raise doubts over its ability of ongoing operation.
The government promotes the full privatisation of ODIE through the sale of its holdings by Q4 2011.

Hellenic Football Prognostics Organisation (OPAP)
OPAP was established in 1958, as a private legal entity and was converted into a Societe Anonyme in 1999. OPAP is
operating on a 20-years concession contract signed on December 15, 2000, pursuant to which the HR granted to the
company the exclusive right to operate and manage 11 numerical lottery and sports betting games in Greece. OPAP is
listed in ATHEX since 2001 and the HR holds 34% of its share capital.
The government intends to enter by Q3 2011 into negotiations with OPAP, in order to explore the possibility to extend
the duration of the existing concession contract for the 11 games and assign new gaming licences. Following such
extension, the HR is planning to fully privatise the company by Q4 2011, by selling the entire State’s participation
(34%) in the Company’s share capital.

State Lottery Tickets
The State Lottery Department of the Ministry of Finance is responsible for the operation and management of the state
lotteries, i.e. the Popular, National and European Lottery and the supervision and control of the Scratch Lottery. The
latter is under suspension since 2001.
The HR is considering assigning its rights in the State Lottery Tickets, for a fixed time period, to a newly established
special purpose company, and then selling 100% of such company’s shares to private investors by Q3 2011.
1.4.6
Energy

Public Gas Corporation (DEPA)
The Public Gas Corporation (DEPA) is the major player in the natural gas sector in Greece. DEPA is the parent
company of DESFA (a 100% subsidiary), the National Natural Gas System Operator which holds the complete and
exclusive right to operate, manage, exploit and develop the National Natural Gas Transmission System within Greece.
The HR controls 65% of DEPA’s share capital while the remaining 35% belongs to the Hellenic Petroleum SA. In
particular, HR intends to unbundle DESFA from DEPA and subsequently proceed to selling DEPA and 31% of
DESFA’s share capital to private investors. The transactions are expected to take place by Q4 2011.

Public Power Corporation S.A. (PPC)
PPC is the largest producer, the owner of the distribution network and the principal supplier of electricity in Greece.
The company is listed in the ATHEX and the HR currently holds 51% of its share capital. The remaining 49% is free
floated. The Government intends to further privatise the company by placing up to 17% of its shares to private
investors through the ATHEX, while maintaining its management. The above mentioned transaction will be concluded
by Q3 2012.
48

Hellenic Petroleum SA (ELPE)
ELPE owns and operates three refineries in Greece being the leading company in the energy sector as well as in the
greater area of Southeast Europe. Refining is the core business of the Group and the three refineries, combined, cover
76% of the country’s total refining capacity.
The company is listed in the ATHEX and the HR currently holds 35.5% of its share capital. A minority stake of 41.3%
is held by Paneuropean Oil and Industrial Holdings S.A. The Government intends to fully privatise the company by
selling its total participation by Q1 2012. The stock’s transfer will not affect the strategic security reserves of the
country.

Submarine gas field “South Kavala”-Conversion to a natural gas storage facility
The submarine natural gas deposit “South Kavala” was discovered on 31.12.1972. Gas production started in 1981.
Today, the field is exploited by a private oil company, to which the HR has granted the exploitation rights. The current
exploitation license expires on 22.11.2014.
The HR intends to investigate the possibility and evaluate alternative ways of optimally exploiting its exclusive rights
on the nearly depleted gas field 'South Kavala' and especially the potential conversion of the field to a natural gas
storage facility, by selling part or all of its participation in the company in which the HR will contribute part or all of its
rights.
The relevant transaction for the sale of rights is expected to take place in Q1 2013.
1.4.7
Telecoms & Post

Hellenic Telecommunications Organisation S.A. (OTE)
OTE Group, consisting of the parent company OTE and its subsidiaries, offers fixed-line (voice, broadband, data and
leased lines) and mobile telephony services in Greece and the Balkan region. Currently the HR holds 16% of OTE’s
shares while it maintains the voting rights of the 4% stake belonging to IKA. Moreover, Deutsche Telekom (DT) holds
a 30% stake. The HR reached an agreement with DT in May 2008, which was ratified by law, according to which the
HR sold 3% of its stake in OTE. Moreover HR was granted two put options covering 5% and 10% respectively. DT has
the management of OTE while HR has a number of veto rights over certain material decisions of a business and
corporate nature.
According to the agreement, the put option 2 for up to 10% of shares of OTE, could be exercised in full or in part at a
price equal to the 20-days volume weighted average share price plus a 15% premium.
The HR decided to further privatise OTE by selling 10% of the company’s shares in Q2 2011.

Hellenic Post (ELTA)
The Greek postal service was transformed into a private legal entity in 1970, which took the form of a S.A. in 1996
under the name Hellenic Post (ELTA). Since 1998 it is the universal provider of postal services in Greece. The HR
currently holds 90% of its share capital while there is a 10% cross holding between Hellenic Post and Hellenic
Postbank (TT). The HR aims to partially privatise the company with the sale of at least 40% of its share capital to a
strategic investor which will also undertake the management of the company in Q1 2012.

Mobile Telephony Licenses (Frequencies of 900 - 1800 MHz)
The 900 MHz, 1800 MHz, and 2100 MHz spectrum rights have been issued for 2G and 3G mobile communication
services.
The rights of use for the radio frequencies in the 900 MHz, which had been granted to VODAFONE S.A. and WIND
S.A. expire in September 2012. Hellenic Telecommunications & Post Commission (EETT) is planning to award these
spectrum rights through an open auction process. This process is expected to be concluded in Q4 2011.
49

Digital dividend and Other Frequencies
The HR has also rights over a number of additional frequencies such as the digital dividend (the 790-862 MHz
frequency range), the UHF spectrum band 470-790 MHz, the Digital Radio Broadcasting (VHF Band III: 174-230
MHz and L Band: 1452 – 1492 MHz), the Analogue Radio broadcasting (FM) and the 2.6 GHz band (2 500-2 690
MHz). From these frequencies the most valuable seems to be the digital dividend which is a unique asset for the
electronic communications market and it is likely that the demand for such frequencies will exceed supply.
The transactions for granting the above state’s rights are expected to take place during Q4 2012-Q4 2013.
1.4.8
Defence Industries

Hellenic Defence Systems S.A. (EAS)
EAS was established in 2004 through the merger of the Greek Powder & Cartridge Company S.A. (“PYRKAL”) and
the Hellenic Arms Industry S.A. (“EBO”). The company is wholly owned by the HR, operates in two sectors: the
defence sector, where it is active in the production of weapons, weapon and missiles systems and ammunition and the
civil sector, where it is active in the production of commercial explosives, metal constructions, wind turbines and sportgun cartridges. The company is currently loss-making with accumulated debt exceeding €1 bn, partially guaranteed by
the HR.
The HR aims to fully privatise the company by selling its total participation (99.8%) and/or its assets to a strategic
investor by Q4 2011.

Hellenic Vehicle Industry S.A. (ELBO)
The Company was established in 1972 as STEYR HELLAS S.A. and in 1987 was renamed to Hellenic Vehicle
Industry S.A. ELBO is an industrial manufacturer with specialized know-how and expertise in the production of all
types of vehicles for military and commercial use. The HR and Mytilineos Holdings S.A. have entered into a
management agreement following the Company’s privatization process in 2000. Currently, the HR holds a 72.6%
participation in the Company’s share capital, while a 24% stake belongs to Mytilineos Holdings S.A.. The HR’s
objective is to privatize ELBO, in 2012, through the sale of up to 100% of its share capital to a strategic investor who
will also undertake the management of the Company. The relevant transaction is expected to take place during Q4
2011.
1.4.9
Banking Sector
The HR’s primary target is to safeguard the stability of the Greek financial system and promote its strategic
restructuring.

Agricultural Bank of Greece (ATE)
The Agricultural Bank of Greece was established in 1929 and in 1991, the Bank became a societé anonyme. ATE was
initially listed in the Athens Exchange (ATHEX) in 2000. The HR currently holds 77.3% of its share capital.
Due to its low capital adequacy, credit risk in the loan portfolio, significant non-bank holdings high exposure to Greek
Government Bonds and high operational cost, the HR decided to immediately proceed with the restructuring of ATE.
In this context, the General Assembly of the Bank decided a share capital increase of euro 1.26 bn, which is expected to
be completed in Q2 2011. On the completion of the Bank’s restructuring the HR intends to proceed with ATE’s
privatization by selling at least 26.2% of its shares to private investors by Q1 2012.
It should be noted that ATE, during the process of its restructuring, intends to sell all its non-core participations in both
listed and non listed companies as per the following table.
I. Non Listed Companies
HELLENIC SUGAR INDUSTRY
DODONI
AIK BANK
ATEBANK ROMANIA
II. Listed Companies
GREEK STOCK EXCHANGE HOLDING (EXAE)
PIRAEUS BANK
OTE
HELLENIC PETROLEUM
50
FBB
ELVIZ
SEKAP

EYDAP
DUTY FREE SHOPS
Hellenic Postbank (TT)
TT is one of the largest Greek banks in terms of assets and has historically been one of the leading depositary
institutions for retail savings in the HR. It provides a wide range of retail banking products through its network of 136
branches in Greece as well as through approximately 820 ELTA branches, based on a cooperation agreement between
ELTA and TT. Currently the HR holds 34% of TT share capital, while there is a 10% cross holding between TT and
Hellenic Post (ELTA).
The HR intends to further privatise TT by selling up to 34% of its share by Q4 2011.

Loan and Consignment Fund (LCF)
LCF has the exclusive right to receive consignments in Greece under the supervision of the Ministry of Finance. LCF
does not own a banking licence, however it does have the ability to carry out a limited number of credit related
activities such as to receive retail deposits from civil servants, provide long-term mortgages to civil servants loans to
Local Government Authorities and Public Sector entities.
The HR is in the process of the sale of the commercial activity unit of the LCF. Following the adoption of the relevant
law, the sale is expected to take place in Q2 2012.

Other Participations in the Banking Sector
Beyod to the above holdings, the HR is a minority shareholder of the National Bank of Greece (1.2%), Piraeus Bank
(1.3%) and Alpha Bank (0.6%)and is considering to disinvest during Q4 2011 from Alpha Bank and National Bank of
Greece and during Q1 2012 from Piraeus Bank.
1.4.10
Metals & Mining

LARCO S.A. (Nickel Production)
Larco was established in 1989 following the liquidation of Hellenic Mining and Metallurgical S.A. of Larymna (the
“Old Larco”), which was founded in 1963. Larco is among the largest ferronickel producers in the world, engaged in
exploration, mining and smelting of nickel. Currently, the HR participates in the company’s share capital with 55.2%,
while 33.4% belongs to the National Bank of Greece S.A. and 11.4% to the Public Power Corporation S.A. The HR is
planning to find a strategic investor in order to sell its stake and give management during Q4 2011.

Mining Rights (extraction of gold, silver and copper)
The HR intends to exploit its rights in several mining reserves that are under development.
The mining rights are expected to be granted in two tranches, the first by Q4 2012 and the second by Q3 2013.
1.5
Real Estate Property

Formation of Real Estate Investment Portfolios
The government is actively promoting a number of legislative and administrative initiatives to establish and enhance
efficiency in the management of real estate portfolios such as the touristic summer housing and hotel development.
The main initiative is the establishment of the Fund for the Development of the Real Estate of the Hellenic Republic,
which will obtain, among other property rights, all public property that can be exploited. In this way, the transfer of
long-term lease or other development will be accelerated while a fast track process of return on the land use will be
accounted for, where appropriate.
51
Furthermore, the government has engaged into a process for the establishment of a full registry of the state-owned real
estates and the management of the resulting investment portfolios. The identification, registration and characterization
of assets are expected to be delivered in the form of a full set of assets in four tranches: June and December of 2011
and 2012. A second, parallel process shall commence in June 2011 after the delivery of the first tranche of assets,
performing portfolio selection and appropriate investment management through specialised SPV’s and other financial
instruments. In the case of estates of national importance, the primal method of exploitation refers to the introduction of
private expertise and capital through long-term concession or lease agreements.
The real estate investment sub-portfolios formulation will be an ongoing process, commencing immediately after the
setup of the first tranche in June 2011. Such process will result in mature transactions from Q4 2011 through the end of
year 2015.
The HR has already identified a specific number of major assets which belong in state controlled real estate companies
that are expected to attract considerable investment interest.
These assets are categorised as below:
Office Space
The assets (offices) included in table 3.2 are managed by KED and have been identified through the process of
selecting buildings currently used by public entities/departments.
In the selection of the assets the following criteria were considered:
-
Buildings in urban prime locations ideally in Athens and Thessaloniki, or other large cities
Properties to have potential for other uses besides the current Government use (e.g. offices)
Size of units/buildings
Buildings with long life expectancies
Buildings where the Government is the sole occupier
The HR is considering formulating an investment portfolio consisting of these assets and offer asset backed securities
to private investors through a sale and leaseback transaction. This transaction is expected to be completed in Q4 2011.
Public Real Estate Corporation (KED)
The table 3.3 includes 31 undevelopped properties of total surface of approximately 98 million square meters that form
an initial real estate portfolio with a potential use in sectors such as tourism, leisure, housing and other economic
activities.
Hellenic Tourist Properties (ETA)
The Hellenic Republic is the sole shareholder of Hellenic Tourist Properties SA (ETA), which manages public touristic
property. Hellenic Tourist Properties has selected ten (10) public properties (see table 3.4), which are considered the
most important of the company's real estate portfolio.
GAIAOSE
GAIAOSE, a Hellenic Railways SA (OSE) subsidiary, which is the sole real estate manager for the latter’s property,
has selected 18 specific assets (land and buildings) from its extensive portfolio (see table 3.5).
The criteria for the selection of the list of GAIAOSE’s assets are based on:

The current use of the land/buildings
The future or potential uses of the assets under development
The actions and time required for the technical maturing of the projects, environmental, planning and other
restrictions
The estimated value and potential revenue
The market conditions
Former Hellinikon International Airport Area (Hellinikon)
52
Hellinikon is a 5,500 acre area that used to accommodate the former international airport of Athens for sixty years,
until 2001. It is located app. 9 kilometers south-east of the Athens city center, occupying an extensive coastal area. The
estate is close to high value residential areas, the Glyfada Golf Club and the Hellinikon marina and is benefited by a
long coast line. The area accommodates a number of Olympic facilities as well as an exhibition centre, but the great
majority of its surface remains undeveloped. Hellinikon is considered the largest available coastal urban estate in
Europe.
The HR decided to proceed with the development of the area using privatisation and fast-track investment procedures.
Privatisation transactions, which are expected to take place during Q4 2011-Q4 2012, will involve intergovernmental
and/or business agreements, through procurement.
Table 3.2 Office Space managed by KED
Building name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Ministry of Culture
Information Technology Secretariat
Criminal Investigation Authority
General Secretariat of National Statistical Service
General Secretariat of Press and Media
Ministry of Foreign Affairs (Wing A - Akadimias 3)
Ministry of Foreign Affairs (Wing C - Akadimias 3)
Ministry of Foreign Affairs (Akadimias 1)
Ministry of Foreign Affairs (Vas.Sofias 1 - Asteras)
Ministry of Foreign Affairs (Zalokosta 1)
Thessaloniki Police HQ
Transit and Foreigners Police Authority
Rodopi Police HQ
Xanthi Police HQ
Serres Police HQ
Xanthi Tax Authority A & B and Xanthi Chemical Bureau
Athens Tax Authority A
Athens Tax Authority O
Korinthos Tax Authority B
Halkida Tax Authority B
Stavroupolis Tax Authority
Alexandroupolis Tax Authority
Agioi Anargyroi Tax Authority
Hania Tax Authority B
Palini Tax Authority
Athens Tax Authority S
Glyfada Tax Authority
Holargos Tax Authority
Kifissia Tax Authority
Thessaloniki Tax Authority G
Sub total
Central Services building of Ministry of Internal Affairs
Attica Police HQ
Attica Passport and Police Operations Center
Ministry of Justice
Ministry of Health
Ministry of Economy and Finance - General Chemistry
Ministry of Internal Affairs - Central Services building
(Central Intelligence Service, Police HQ)
Ministry of Education
Ministry of Culture (Bouboulinas)
Total
Address
196-198 Thivon Avenue, Rentis
Thesalonikis and Chandri Street, Moschato
Athinon and 4-6 Antigonis Street, Athens
Piraeus and Eponiton Street, Piraeus
11 Fragouli Street, Kallithea
3 Akadimias Street, Athens
3 Akadimias Street - Kriezotou and Zalokosta, Athens
1 Akadimias and Vassilisis Sofias Avenue, Athens
1 Vassilisis Sofias and Panepistimiou Avenue, Athens
1 Zalokosta Street, Athens
326 Monastiriou Street, Thessaloniki
24 Petrou Ralli Street, Athina
3 Dimokratias Street, Komotini
Nestou & Platonos Street, Xanthi
G. Papandreou & Thessalonikis Street, Serres
13 Messologgiou Street, Xanthi
6 - 8 Anaxagora Street (Omonoia), Athens
175 Damareos Street, Athens
Korinthos - Patra Steet Korinthos
Mayor Skouras Street, Halkida
13-15 Karaoli Dimitriou Street, Thessaloniki
2 Ag. Dimitriou Street, Alexandroupoli
Prigipisas Olgas & Prigipisas Sofias Street, Ag.
Anargyroi
3 Tzanakaki Street, Chania
43 Ethnikis Antistaseos & Dervenakion Street, Pallini
Evelpidon & Leykados Street, Athens
227 Gounari Street, Glyfada
100 El. Venizelou Street, Cholargos
43 Acharnon Street, Kifisia
8-10 Tsakantza & Chrysostomou Street, Thessaloniki
15 Vassilis Sofias Avenue, Athens
Alexandras & Dimitsanas Street, Athens
5 Manolidou & 8 Chiou Street, Kaisariani
96 Mesogeion Avenue, Athens
39 Kifisias Avenue, Marousi
16 A. Tsocha Street, Athens
Mesogeion Avenue, Kareas
37 A. Papandreou Street Marousi
20-22 Bouboulinas, Athens
Surface area (sqm)
35.488
22.636
16.742
13.300
9.930
9.315
7.764
7.080
5.670
1.960
15.900
15.456
3.486
2.433
1.778
4.557
3.285
2.771
2.612
2.520
2.471
2.428
2.082
1.927
1.785
1.778
1.728
1.673
1.463
1.382
203.400
7.500
25.000
7.000
10.000
28.000
3.400
31.000
28.000
5.000
551.700
53
Table 3.3 Real Estate Properties Managed by KED
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Perfecture
SALONICA
DODECANESE
XANTHI
AITOLOAKARNANIA
ATTICA
DODECANESE
HERAKLION - CRETE
PELLA
PELLA
DODECANESE
ATTICA
ARGOLIDA
DODECANESE
EVIA
SALONICA
FTHIOTIDA
KAVALA
KAVALA
SAMOS
CORFU
PIERIA
ZANTE
CORFU
KOMOTINI
CHALKIDIKI
CHALKIDIKI
AITOLOAKARNANIA
CYCLADES
KAVALA
SALONICA
IOANNINA
Municipality
MICRA
AFANTOU- RHODES
ERASMIO (VOICE OF AMERICA
ANTIRRION
LAVRION
PRASSONISSI- RHODES
GOURNES
MOUNT VORRAS -LAKE VEGORITIDA
MOUNT VORRAS -LAKE VEGORITIDA
LINDOS- RHODES
METHANA
ERMIONI
ARCHAGELOS- RHODES
CHALKIDA
THERMI
MEGALI VRISSI
ELEFTHERES
ORFANOS
VATHI
KASSOPAION
KATERINI
ALYKES
MELITIEON
IMEROS
SITHONIA
TORONI
MESSOLOGHI
TINOS
ELEYTHERES- HERAKLITSA
MENEMENI
IOANNINA
Total
Area (sqm)
652.000
175.000
8.000.000
223.000
30.000
80.000.000
738.000
18.900.000
392.000
105.000
~1.000.000
153.000
410.000
~700.000
1.360.000
255.000
323.000
518.000
939.000
489.000
129.200
170.250
1.788.000
~800.000
94.700
76.000
278.000
55.000
45.000
85.000
400.000
Potential uses
COMMERCIAL- TOURISTIC
TOURISTIC – RESIDENTIAL
TOURISTIC- CULTURAL -EDUCATION
COMMERCIAL–TOURISTIC– RESIDENTIAL
COMMERCIAL–TOURISTIC– RESIDENTIAL
COMMERCIAL–TOURISTIC - RESIDENTIAL
TOURISTIC- LEISURE - COMMERCIAL
SPORTS- TOURISM - LEISURE
SPORTS- TOURISM - LEISURE
TOURISM- LEISURE
TOURISTIC
TOURISTIC – RESIDENTIAL
TOURISM –LEISURE - RESIDENTIAL
COMMERCIAL - RESIDENTIAL
COMMERCIAL -LOGISTICS
COMMERCIAL -LOGISTICS
TOURISTIC- RESIDENTIAL
TOURISM
TOURISTIC- RESIDENTIAL
TOURISM
TOURISM
TOURISM -LEISURE
TOURISM
TOURISM
TOURISM
TOURISM
COMMERCIAL - TOURISTIC
TOURISM
RESIDETIAL–COMMERCIAL- TOURISTIC
COMMERCIAL- LOGISTICS
RESIDENTIAL-COMMERCIAL- TOURISTIC
97.883.150
Table 3.4 Hellinikon & Real Estate Properties Managed by ETA
Perfecture
1
CENTRAL GREECE
Municipality
FTHIOTIDA
Area(sqm)
863.315
2
3
4
5
6
7
8
CRETE
WEST GREECE
WEST GREECE
SOUTH AEGEAN
SOUTH AEGEAN
ATTICA
CENTRAL MACEDONIA
HERAKLION - CRETE
HLEIA
HLEIA
RHODES
RHODES
ANABYSSOS
CHALKIDIKHS
353.237
433.269
127.698
1.530.000
1.455.720
1.460.000
1.934.000
9
ATTICA
FALHRO
10
ATTICA
MARKOPOULO
MESOGAIAS
Sub total
11
ATTICA
Total
286.000
1.029.279
Description/Current use
REAL ESTATE & CAMPING "KAMENA
VOURLA"
XENIA HOTEL "KARTEROU"
SPA "KOUNOUPELIOU"
BEACH REAL ESTATE "ZACHARO"
BEACH REAL ESTATE & GOLF "AFANTOU"
BEACH REAL ESTATE "TSAMPIKAS"
BEACH REAL ESTATE "ALYKES"
BEACH REAL ESTATE, CAMPING & XENIA
HOTEL "PALIOURI"
FALIRO OLYMPIC COMPLEX & TAE KWON
DO VENUE
OLYMPIC EQUESTRIAN CENTER
Potential use (s)
TOURISM
TOURISM
TOURISM
TOURISM
TOURISM
TOURISM
TOURISM
TOURISM
COMMERCIAL, TOURISM,
ENTERTAINMENT,
HOUSING
COMMERCIAL, TOURISM,
ENTERTAINMENT,
SPORTS
9.472.518
GLYFADA, HELLINIKON
5.500.000
FORMER HELLINIKON AIRPORT
COMMERCIAL, TOURISM,
ENTERTAINMENT,
HOUSING
14.972.518
54
Table 3.5 Real Estate Properties Managed by GAIAOSE
1
2
3
4
PREFECTURE
ATTICA
ATTICA
CENTRAL MACEDONIA
THESSALY
MUNICIPALITY
PIREAUS
SAINT ANARGYRI
THESSALONIKI
NEW IONIA VOLOU
DESCRIPTION / CURRENT USE
RAILWAY STORAGE FACILITIES
RAILWAY STATION
OLD RAILWAY STATION
RAILWAY FACILITIES
5
6
7
8
THESSALY
THESSALY
THESSALY
ATTICA
VOLOS
VOLOS PORT
LARISSA
ELEFSINA
RAILWAY STATION
N/A
RAILWAY STATION
EMPTY SITE
N/A
N/A
N/A
588.000
FORMER MILITARY CAMP (GONI CAMP)
672.000
9 CENTRAL MACEDONIA THESSALONIKI
10 THRACE
ALEXANDROUPOLIS
(DEDE AGATS)
N/A
11
12
13
14
15
VOLOS & LARISSA
PIREAUS
ATHENS
THESSALONIKI
NEW SMYRNI
N/A
RAILWAY STATION
RAILWAY STATION
RAILWAY STATION
URBAN LAND
THESSALY
ATTICA
ATTICA
CENTRAL MACEDONIA
ATTICA
N/A
16 CENTRAL MACEDONIA THESSALONIKI
URBAN LAND
17 CENTRAL MACEDONIA THESSALONIKI
URBAN LAND
18 ATTICA
Total
Land
Buildings
RAILWAY INSTALLATIONS
2.
ATHENS (ROUF)
AREA(sqm)
120.000
88.000
10.000
13.000
N/A
13.491
110.000
1.010.001
Site: 339 sm (Building:
437 sm )
Site: 643 sm (Building:
2,438 sm )
Site: 407 sm (Building:
1,180 sm )
Site: 9,500 sm
POTENTIAL USE(S)
COMMERCIAL
COMMERCIAL
COMMERCIAL
RECREATION
PARK/COMMERCIAL
COMMERCIAL
TOURISTIC
COMMERCIAL – TOURISTIC
LOGISTICS/3PL CENTRE
(Project to be developed on a
concession basis)
LOGISTICS/3PL CENTRE
(Project to be developed on a
concession basis)
LOGISTICS CENTRE (Project
to be developed in cooperation
with the City's Port Authority
and the Local Authority)
LOGISTICS CENTRE
COMMERCIAL/LEISURE
COMMERCIAL/LEISURE
COMMERCIAL/LEISURE
SALE OF LAND AND
BUILDING
SALE OF LAND AND
BUILDING
SALE OF LAND AND
BUILDING
SALE OF LAND
1.726.380
4.055
MEDIUM TERM FISCAL STRATEGY 2011-2015
The Medium Term Fiscal Strategy expresses the philosophy of the transition to multi -year budgets and multi-year
fiscal programming for the whole general government.
In this context, the MTFS outlines the limits and commitments that are undertaken for the period 2011-2015, with
regard to the revenues and expenditure of all the sub-sectors of the general government, including the Public
Investment Budget, the Privatization and State Fixed Assets Management Program, as well as the General Government
Debt.
Such limits and commitments are undertaken in relation to the fiscal targets set for the whole period in line with the
national effort to drive the country out of the economic crisis.
The Medium Term Fiscal Strategy is presented in table 3.6
Table 3.6 Medium Term Fiscal Strategy 2011-2015
Ι.Revenues
1. Net revenues (a+b-c)
a. Recurrent/ordinary revenues
1.Direct taxes
2.Indirect taxes
3. Transfers from EU
4. Non-tax revenues
b. One-off revenues
c. Tax refunds
2. Public investment budget revenues
a. EU flows
b. Other revenues
c. Own revenues
ΙΙ. Expenditure
1. Total Ordinary Budget expenditure
2009
Actuals
50,585
48,545
52,307
21,431
28,293
264
2,319
1,190
4,952
2,040
1,734
123
183
84,215
74,627
2010
2011
2012
2013
2014
2015
Projections Estimates Estimates Estimates Estimates Estimates
54,259
57,967
60,844
62,005
63,252
64,956
51,187
54,042
56,229
57,212
59,407
61,318
54,383
55,592
57,668
59,058
61,280
63,596
20,223
20,554
21,711
22,035
22,844
23,980
31,043
30,219
31,243
32,577
34,237
35,254
320
185
148
165
174
176
2,797
4,634
4,566
4,281
4,025
4,186
1,786
2,250
2,258
1,900
1,927
1,580
4,982
3,800
3,697
3,746
3,800
3,858
3,072
3,925
4,615
4,793
3,845
3,638
2,634
3,192
3,616
3,842
2,910
2,730
167
530
788
746
732
706
271
203
211
205
203
202
75,690
79,021
78,771
82,837
82,413
84,749
67,243
71,471
71,071
75,137
74,713
77,049
55
a. Total Ordinary Budget primary expenditure
1. remuneration and pensions
2. Insurance and Healthcare
3. Operating and other expenditure
4.Earmarked expenditure
5. Non allocated expenditure
6. Reserve
b.1. Guarantees of PEs reclassified to General Government
2. Guarantees of PEs remaining outside General Government
c. Interest expenditure
d. Transfers to hospitals for settlement of past debt
e. Payments for military procurements
2. Public Investment Budget expenditure
ΙΙΙ. State Budget Balance
% GDP
ΙΙΙ.a. Primary State Budget Balance
58,043
24,487
17,779
9,326
6,452
0
0
484
100
12,325
1,498
2,175
9,588
-33,630
-14.3%
-21,305
51,656
22,139
15,747
8,107
5,663
0
0
827
145
13,223
375
1,017
8,447
-21,431
-9.3%
-8,208
52,049
21,632
17,414
7,261
5,162
0
580
1,245
224
16,002
450
1,500
7,550
-21,054
-9.3%
-5,051
50,668
20,846
15,172
7,459
5,622
50
1,520
1,518
134
16,900
350
1,500
7,700
-17,927
-7.8%
-1,026
51,647
20,675
16,137
7,327
5,967
50
1,490
1,979
211
19,500
300
1,500
7,700
-20,832
-8.8%
-1,332
50,050
20,470
15,247
6,981
6,096
100
1,155
1,024
139
22,000
300
1,200
7,700
-19,161
-7.9%
2,839
50,646
20,460
15,370
6,791
6,205
100
1,720
1,636
67
23,400
300
1,000
7,700
-19,793
-7.9%
3,607
-528
-4,145
708
-1,371
-1,041
-678
-384
647
-1,593
878
3,059
1,235
1,248
1,151
1,818
1,259
2,677
1,433
1,992
1,767
2,795
-35,104
-21,638
-17,862
-16,328
-17,937
-16,414
-15,615
27
-158
-131
-379
-186
-565
-372
225
-148
345
223
568
1,041
313
1,354
1,681
0
1,681
2,169
0
2,169
393
-1,466
-1,074
369
-2,357
-1,988
2,428
-778
1,650
3,039
-150
2,889
6,471
-200
6,271
9,691
-200
9,491
12,121
-200
11,921
ESA95 General Government Balance
% GDP
-36,308
-15.4%
-24,191
-10.5%
-16,359
-7.3%
-12,871
-5.6%
-10,312
-4.4%
-5,241
-2.2%
-1,525
-0.6%
GDP
235,017
230,173
225,400
228,400
235,500
242,900
251,900
ESA95 adjustments for central government
Public entities balance except public corporations*
Reclassified Public Corporations Balance
ESA95 Central Government Balance
Local Govenrment Balance
Local Government ESA95 adjustments
ESA95 Local Government Balance
Social Security Funds Balance
Social Security Funds ESA95 adjustments
ESA95 Social Security Funds Balance
*
including AKAGE
The implementation of the measures, according to their annual breakdown, results in significant decrease of interest
payments. Such reduction, cumulatively amounting to 6.2 bn euro for the whole period, is due to the reduction of
deficits to be financed, resulting in reduced borrowing during the 2011-2015 period. This second round effect reduces
the fiscal gap of the baseline scenario and, as a result, less measures are needed.
The above effect on interest payments is illustrated briefly in table 3.7.
Table 3.7 Necessary measures at the end of the period 2011-2015
(cumulatively)
(in mn euro)
Fiscal deficit 2015 of baseline scenario
Minus 2015 target
Necessary measures without the second round effect of interest payments
Minus second round effect on interests
Measures needed to cover the fiscal gap
36,183
2,600
33,583
6,200
27,383
From the above table it can be concluded that the measures needed to cover the fiscal gap for the period amount to
27,383 mn euro. However, adopted measures amount to approximately 28.351 mn euro, in order to provide for some
security reserve, since estimates for the respective yield of the measures for a five year period (2011-2015) can contain
a statistically acceptable risk margin.
Under the MTFS the fiscal targets are met during the whole period 2011-2015 as it is shown in table 3.8. The MTFS
contemplates for the period 2012-2015 an overshooting of the fiscal targets, i.e. a better fiscal outcome compared to the
annual target set.
This policy in connection with the annual yield distribution of the measures aims at:
 preserving the dynamics of the fiscal effort during the first years of the period,
 ensuring significant safety margins as early as possible vis-à-vis the end-period target,
 allowing the possibility for an evertual intervention from the safe side in case of reduced future yield of some
measures.
56
Table 3.8 Fiscal gap per year for the period 2011-2015
(mn euro)
ESA 95 General Government Deficit (after measures)
2011
2012
2013
2014
2015
Εκτίμηση
Εκτίμηση
Εκτίμηση
Εκτίμηση
Εκτίμηση
-13,871
-10,312
-5,241
-1,525
-16,359
% GDP
ESA 95 General Government Deficit (targets)
% GDP
Fiscal gap
GDP
-7.3%
-5.6%
-4.4%
-2.2%
-0.6%
-17,065
-14,916
-11,399
-6,385
-2,600
-7.6%
-6.5%
-4.8%
-2.6%
-1.0%
706
2,045
1,087
1,144
1,075
225,400
228,400
235.500
242,900
251,900
The ESA95 central government deficit is reduced from 14.4% of GDP in 2015 in the baseline scenario to 0.6% of GDP
after measures.
It should be mentioned that the fiscal interventions in all subsectors of the general government can lead them (Local
government, SOEs, EBFs and SSFs) to surpluses, as of 2012 alleviating the Central Government balance.
A significant reduction of interest payments is achieved under MTFS, to 24,700 mn euros, from 30,900 mn euros in
2015 in the baseline scenario.
Table 3.9 Central government interest payments
(mn euros)
2011
2012
2013
2014
2015
Α. Estimate of interest payments with measures
Interest on a cash basis
16,002
16,900
19,500
22,000
23,400
Interest on accrual basis (ESA 95)
15,559
18,500
20,900
23,300
24,700
6.9%
443
8.1%
-1,600
8.9%
-1,400
9.6%
-1,300
9.8%
-1,300
Interest on a cash basis
16,100
16,900
19,800
20,700
21,100
Interest on accrual basis (ESA 95)
15,800
7.0%
17,900
7.8%
20,900
8.9%
21,300
8.8%
21,700
8.6%
Interest on accrual basis as % of GDP
Difference cash-accrual interest (ESA adjustments)
Β. Estimate of interest payments with measures and privatizations
Interest on accrual basis as % of GDP
Difference cash-accrual interest (ESA adjustments)
GDP
300
-1,000
-1,100
-600
-600
225,400
228,400
235,500
242,900
251,900
If the fiscal adjustment is reinforced by the Privatization and State Assets Management Program, the interest payments
are further reduced by 3,000 mn euros in 2015 reaching 21,700 mn euros.
The general government debt after picking up in the year 2013 to 167% of GDP, it gradually decreases in the final two
years of the period, reaching 159.3% of GDP in 2015. This scenario, combined with high general government primary
surpluses, produces a sustainable debt which however reduces at a very slow pace.
Table 3.10 Development of general government debt
(mn euros)
Α. Estimate of general government debt with
measures
General government debt
General government debt as % of GDP
2009
2010
2011
2012
2013
2014
2015
298,706
127.1%
328,587
142.8%
357,450
157.7%
379,900
166.3%
393,400
167.0%
399,400
164.4%
401,300
159.3%
Β. Estimate of general government debt with
57
measures and privatizations
General government debt
General government debt as % of GDP
298,706
127.1%
328,587
142.8%
352,436
155.5%
364,886
159.8%
371,436
157.7%
364,503
150.1%
351,356
139.5%
GDP
235,017
230,173
226,685
228,400
235,500
242,900
251,900
These levels of interest payments and general government debt reflect the reduction of deficit and the creation of
primary surpluses based on a series of interventions in major categories of revenues and expenses which are analysed
below.
If one adds the privatizations’ impact on the above scenario, then debt starts decreasing already in 2013, reaching
139.5% of GDP in 2015, which leads to an absolutely sustainable debt, since it reduces at a faster pace.
In this context, the adoption of the Privatization and State Assets Management Program seems imperative, as it secures
a fast and reliable reduction of debt and its long-term sustainability, while it releases significant funds that would
otherwise be used for interest payments, to be driven to investment supporting the economic growth and the creation of
new jobs.
58
The impact of a 50 bn euros state-owned assets’ divestiture on public debt sustainability
A starting point of public debt sustainability is that the government should satisfy its budget constraint. Thus, under the
simplified assumption of a constant GDP growth rate and a constant interest rate, the evolution of the public debt to GDP
ratio can be expressed by the following first-order difference equation:
d t  d t 1  ( r  g ) d t 1  ps t
where d is the public debt to GDP ratio, r is the nominal implicit interest rate, g is the nominal GDP growth rate and ps is
the primary budget balance to GDP ratio.
The following exercise assesses the impact of a 50 bn euro state-owned assets’ divestiture effort on the evolution of
public debt to GDP ratio until 2025. The two baseline scenarios (scenario 1 and scenario 2) assume that during the
period 2015-2025, there is no implementation of a state-owned assets’ divestiture program, while the implicit interest rate
is constant at 5.0% and the primary budget surplus remains constant at 6.0% of GDP. The two scenarios differentiate
only on the assumption made on the nominal GDP growth rate. Under Scenario 1, the nominal growth rate is constant at
3.0% throughout the exercise, while under scenario 2, the growth rate is 5.0%. The significance of GDP growth on public
debt sustainability is considerable, since a higher GDP growth rate reduces substantially public debt to GDP ratio over
the medium term.
The two alternative scenarios (scenario 1.1 and scenario 2.1) adopt the assumption regarding the implementation of a
state-owned assets’ divestiture program. Thus, they assume that a 50 bn euro state-owned asset divestiture effort
spanning through 2015 is broken down as follows: 5 bn in 2011, 10 bn in 2012 and 35 bn during the period 2013-2015.
The divestiture effort contributes substantially to the improved public debt to GDP ratio dynamics, starting from 2011.
Under the alternative scenarios, the public debt to GDP ratio is lower compared to the two baseline scenarios over the
period 2011 to 2024. It is stressed that the divestiture effort substantially improves debt sustainability, even under the
assumption of a lower GDP growth (scenario 1.1 vs scenario 2). Also, the divestiture effort coupled with an improved
economic outlook that could stem from the implemented structural reforms will contribute to the sustainable reduction in
public debt to GDP ratio.
It should be noted that the positive impact of the state-owned assets’ divestiture effort on public debt sustainability could
be higher, since in the present exercise there are no second round effects on the GDP growth rate, stemming from the
program implementation.
59
3.
GOALS FOR REVENUES AND EXPENDITURE
Given the goals of the deficit and debt for the period 2011-15 and fully aware of the enormous sacrifices that the Greek
population is called to make in the short time of the following four-year period, the Government aimed at taking
concrete measures, which implement and promote the set targets, through permanent structural interventions in the
subsectors of the general government and not measures that promote temporary cash-flow increase of the revenues and
reduction of expenditure.
The total fiscal effort amounts to 28.4 bn euros, out of which:


6.7 bn euros concern the measures to be taken in 2011 in order to cover the part of the fiscal deviation of year 2010
that has a carry-over for year 2011, because of the larger than originally estimated recession, as well as eventual
risks in the implementation of the 2011 budget.
21.7 bn euros concern measures to be taken during the 2012-2015 period aiming at the reduction of the deficit by
14.4 bn euros. This specific fiscal effort consists of expenditure reduction by ½ and of revenue increase by ½.
The fiscal effort 2011-2015 stems almost equally from revenues and expenditure
(in billion euros)
30,0
25,0
Fiscal effort from
the revenue side
14,1
20,0
15,0
Total fiscal effort
28,4
Fiscal effort from the
expenditure side
14,3
10,0
5,0
0,0
2011-2015
2011-2015
The overall performance of the measures is analyzed as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Major category of measures
Rationalization of the public wage bill
Reduction of operational expenses
Close down/merger of public entities and grant reductons
Restructuring of state-owned enterprises
Reduction of defense expenditure
Cost savings and improved outcome of the health sector
Rationalization of pharmaceutical / healthcare expenditure
Reduction in Social Security Fund expenditure and rationalization of other social expenditure
Increase in Social Security Fund revenues and tackling social insurance contribution evasion
Strengthening tax compliance
Reduction of tax exemptions and other tax revenue
Increase in Local Government revenues
Rationalization of PIB expenditure
Total
% GDP
0.9%
0.5%
0.5%
0.6%
0.5%
0.4%
0.5%
2.2%
1.4%
1.2%
2.9%
0.6%
0.2%
12.1%
Amount
2.2
1.1
1.2
1.3
1.2
1.0
1.1
5.2
3.2
3.0
6.5
1.5
0.5
28.4
The timing of the measures is front-loaded and the annual distribution is as follows:



In 2011 6.7 bn euros or 23.7% of total measures
In 2012 6.9 bn euros or 24.7% of total measures
In 2013 4.7 bn euros or 16.7% of total measures
60


In 2014 5.9 bn euros or 20.2% of total measures
In 2015 4.1 bn euros or 14.5% of total measures
The specification of the measures by major category appears in table 3.11. Some of these measures have no direct cash
flow effect, but they contribute to the creation of necessary structures, which will lead to a permanent and sound
system of revenue and expenditure management across all government activity.
It is understood that, for the first time a complete rationalization of the fiscal position of all sub sectors of general
government without exceptions, is undertaken. It should be noted though that the management attempt does not
concern the deficits caused by social benefits, but it aims at the reductions of deficits caused by mismanagement,
structural distortion or, finally, from long lasting weaknesses or/and behaviours.
61
Table 3.11 Proposed measures for the MTFS 2011-2015
(in mn euros)
Measures description
1.
1. 1
1. 2
1. 3
1. 4
2.
2. 1
2. 2
2. 3
2. 4
2. 5
3.
3.
3.
4.
4.
4.
4.
4.
4.
1
2
1
2
3
4
5
5.
5. 1
5. 2
6.
6. 1
6. 2
6.
6.
6.
7.
7.
3
4
5
7.
7.
7.
8.
8.
2
3
4
1
1
8. 2
8. 3
8. 4
8. 5
8. 6
8 7
8. 8
8. 9
8. 10
9.
9. 1
Rationalization in Public Sector Wage Bill
Public sector wage bill reduction through a reduction in new hiring
(implementation of 1:10 rule in 2011 and 1:5 until 2015), suspension of
wage drift, better use of human resources etc
Increase in weekly working hours for public sector employees from 37,5 to
40 hours and reduction in overtime payments, further reduction in the
number of remunerated committees and councils and other additional
compensation
Reduction in fixed and temporary contracts (50% in 2011 and 10%
thereafter)
Introduction of part-time public sector employment, paid (labour reserve)
and unpaid leave
Reduction in Operational Expenses
Reduction of grants for free distribution of newspapers
Withholding 11% on operational expenditure in the ordinary budget (excl.
inelastic expenditure such as utilities, rents, cleaning)
Reduction in procurement expenses charged by the Bank of Greece
Implementation of e-procurement for all public procurement
Rationalization of public expenditure (energy expenses,
telecommunications, rental expenses) and full implementation of MIS
Rationalization/Consolidation of Extra-budgetary Funds and grants
reduction
Reduction of grants to entities outside General Government
Action plan on closing and merging general government entities
SoE Restructuring
Increase in revenue of public transport bodies and other SoEs
Restructuring plans of SoEs
Sale of assets associated with non-core activities
Reduction in personnel expenses
Reduction of operational expenses and savings from closures or mergers of
activities
Reduction in Defense Expenditure
Reduction in operational expenses
Savings from the military procurement program (of which 800 mio euros
refer to 2012, 2013, 2014 and 2015 and have been taken into consideration
in the baseline scenario and for that reason they do not sum up in total
measures)
Savings of expenses and improvement in Healthcare sector
Special levy on smoking free entertainment enterprises
Hospitals' revenues increase through (Ι) agreement between NHS' hospitals
and private insurance agencies, (ΙΙ) introduction of charges for services
provided to foreign citizens, (ΙΙΙ) and reduction in the services provided to the
non-insured (gate keeping function)
New Health Map
Central Procurement System in hospitals and pricing of medical practices
National Organization for Primary Healthcare (EOPI) starts operating
Savings in Pharmaceutical Expenditure
Scanning and control of hand written prescriptions and full implementation of
e-prescription system
Expansion of official list of pharmaceuticals that don't require prescriptions
New pricing of medicines in 2011
Establishment of insurance price for medicines by social security sector
Reduction in expenses of SSFs and rationalization of social spending
Rationalization of benefits and beneficiaries of OEE-OEK, OAED and other
beneficiaries
Tight control and cross-checking of personal data for implementation of
criteria for pensions and other benefits
Reduction in expenses for lump-sum payments to pensioners according to
social contributions
Adjustment in auxiliary pensions
8% special social contribution of pensioners below 60 years old who have
not been fired and have monthly pensions above 1.700 Euros (eg. military
personnel, police etc.) and increase in the special pensioners contribution
for pensions above 1700 €
Reduction of NAT pension expenditure (6% reduction)
Reform of the disability pension system
Reduction in the core pension of OGA and in the lower pension thresholds
of other SSFs, and tightening of beneficiary criteria based on location of
permanent residence
Evaluation and rationalization of social programs
Reduction of grants to TAP-OTE
Increased revenue of SSFs and reduction in contribution evasion
Social Solidarity Contribution for Unemployed from employees of the public
sector, SoEs, Local Government and public entities
2011
2012
2013
2014
2015
2011-2015
% GDP
770
350
600
170
448
200
306
200
71
50
2,195
970
0.9%
0.4%
100
250
50
60
0
460
0.2%
245
35
28
21
21
350
0.2%
75
145
170
25
0
415
0.2%
190
20
130
92
20
0
161
0
0
323
0
0
370
0
0
1,136
40
130
0.5%
0.0%
0.0%
40
0
0
0
42
30
0
61
100
0
23
300
0
20
350
40
146
780
0.0%
0.1%
0.3%
540
150
200
200
150
1,240
0.5%
290
250
0
0
0
0
0
50
100
414
0
119
25
200
70
50
150
329
120
28
25
75
81
50
150
298
120
41
25
39
72
50
100
274
0
147
25
38
64
490
750
1,314
240
335
100
352
287
0.2%
0.3%
0.6%
0.1%
0.1%
0.0%
0.2%
0.1%
0
0
0
200
0
200
333
133
200
333
133
200
334
134
200
1,200
400
800
0.5%
0.2%
0.3%
60
40
20
204
0
20
149
0
10
203
0
15
363
0
75
979
40
140
0.4%
0.0%
0.1%
0
0
0
250
35
64
50
70
493
208
64
75
0
200
100
38
150
0
100
100
38
150
100
100
100
204
425
170
1,143
543
0.1%
0.2%
0.1%
0.5%
0.2%
30
100
85
1,188
345
10
30
245
1,230
251
0
0
100
1,025
65
0
0
0
1,010
0
0
0
0
700
0
40
130
430
5,153
661
0.0%
0.1%
0.2%
2.2%
0.3%
330
251
130
80
50
841
0.4%
250
100
0
0
0
350
0.2%
50
88
310
88
200
0
200
0
100
0
860
176
0.4%
0.1%
50
25
0
50
80
100
0
120
50
0
180
30
0
220
30
100
625
210
0.0%
0.3%
0.1%
0
50
629
455
0
0
259
0
460
0
714
0
520
0
1,139
0
300
0
504
0
1,280
50
3,245
455
0.5%
0.0%
1.4%
0.2%
62
Table 3.11 Proposed measures for the MTFS 2011-2015
(in mn euros)
Measures description
9. 2
9.
9.
9.
9.
10.
10.
10.
10.
10.
10.
11.
11.
11.
3
4
5
6
1
2
3
4
5
1
2
11.
11.
11.
11.
11.
11.
11.
3
4
5
6
7
8
9
11.
11.
11.
11.
11.
10
11
12
13
14
11. 15
12.
12. 1
12. 2
12. 3
13.
13. 1
13. 2
Introduction of social solidarity contribution to all self-employed through their
corresponding SSFs
Adjustment of unemployment contribution for private sector employees
Increase in contributions for OGA and ETAA beneficiaries
Establishment of OAEE beneficiary solidarity fund
Restriction of undeclared work and measures against social contribution
evasion
Improved Tax Compliance
VAT
Income taxes for individuals
Income taxes for legal entities
Reduction in smuggling
Other taxes
Reduction of tax exemptions and other tax revenue
Evaluation and reduction of tax exemptions
Reduction of non-tax threshold to 8000 euros for persons in the age of 3065 years
Special crisis contribution to households
Introduction of special fee for liberal professions
Increase of living presumptions for all taxpayers
Increase VAT for restaurants from 13% to 23% from 1/9/2011
Changes in property taxes
Revenues from unauthorised buildings
Changes in tax regime for tobacco and accelerated payment of excise duty
from 56 to 26 days
Regulation on private yachts and inclusion in tax services records
Revenues from excise taxes
Increase in vehicle tax
Special contribution on vehicle, motorbikes, yachts and pools
Gradual harmonisation of tax on heating fuel witn tax on fuel for general
purposes
Abolition of 10% of tax refund from receipts from 1/1/2012
Improvement of Local Government economic results
Re-evaluation of LG expenses
Increase in LG revenues due to economies of scale and better organization
of collection mechanisms
Increase in local tax compliance following the introduction of local tax
clearance certificate requirement
Rationalization of PIB expenditure
Reduction in expenditure of national part of PIB
Reduction in administrative costs associated with National Strategic
Reference Framework (ESPA)
TOTAL MEASURES
EXPENDITURE
REVENUE
GDP
(1)
2011
2012
2013
2014
2015
2011-2015
% GDP
100
0
0
0
0
100
0.0%
74
0
0
0
219
40
0
0
4
60
150
500
4
185
450
500
4
0
0
500
305
285
600
1,500
0.1%
0.1%
0.2%
0.6%
0
0
0
0
0
0
2,017
0
338
0
0
0
0
0
0
3,678
380
1,012
878
250
125
250
162
91
156
0
0
975
244
244
244
146
97
685
0
0
1,147
200
400
400
80
67
0
0
0
3,000
694
769
894
389
255
6,535
380
1,350
1.2%
0.3%
0.3%
0.4%
0.2%
0.1%
2.9%
0.2%
0.6%
1,367
300
0
300
0
300
150
0
100
220
700
445
-200
150
0
0
0
0
0
0
0
0
0
0
0
355
0
0
0
0
0
0
0
0
0
1,380
400
220
1,000
800
100
300
0.6%
0.2%
0.1%
0.4%
0.3%
0.0%
0.1%
150
250
100
150
-188
-100
315
0
-150
-394
-50
0
0
0
206
0
0
0
0
330
0
0
0
0
0
0
565
100
0
-46
0.0%
0.2%
0.0%
0.0%
0.0%
-1,200
150
150
0
1,200
355
250
105
0
345
175
120
0
350
170
130
0
305
160
145
0
1,505
905
500
0.0%
0.6%
0.4%
0.2%
0
0
50
50
0
100
0.0%
950
950
0
-446
-600
154
0
0
0
0
0
0
0
0
0
504
350
154
0.2%
0.2%
0.1%
6,744
4,058
2,686
225,449
7,029
2,962
4,067
228,390
4,738
2,675
2,063
235,523
5,721
2,583
3,139
242,886
4,118
2,222
1,896
251,930
28,351(1)
14,274
14,077
12.1%
6.1%
6.0%
An amount of 800 mn euros concerns military procurement expenditure (category 5.2) in years 2012, 2013 and 2015 which has been taken into consideration in
the baseline scenario and for that reason it is not added up in the total sum of measures.
63
3.1
Main policy measures with fiscal implications on the 2012 budget
Especially for 2012, which is the budget year, there is a more analytical reference to the new measures that will be
introduced during this year, in order to meet the fiscal targets.
For the deficit target of the general government at 5.6% of GDP in 2012 to be met, total revenues of 99.4 bn euros or
43.5% of GDP and total expenditure of 112.2 bn euros or 49.2% of GDP are projected.
The basic new measures from the side of expenditures refer to the following main categories:
 Rationalization of wage bill (600 mn euros)
 Reduction of operational and other expenses (92 mn euros) through procedures of e-procurement for the
procurements of the public sector, reduction of energy expenses, rents, telecommunication costs through syzefxis,
etc.
 Reduction of the administrative cost of ESPA (446 mn euros)
 Mergers / closing and reduction of financing of entities (150 mn euros)
 Restructuring of SOEs (414 mn euros)
 Reduction of healthcare expenditure (204 mn euros) by means of the new Health Map, the reevaluation of task and
expenditure of supervised non-hospital entities, the introduction of a central hospital procurement system, the
reduction of healthcare cost per case and the establishment of EOPPY
 Reduction of pharmaceutical expenditure with the full scale implementation of e-prescriptions (493 mn euros)
 Reduction of expenditure for social insurance (1,230 mn euros) through the adjustment of auxiliary pensions, the
rationalization of benefits and the number of beneficiaries of OEE and OEK, the reduction of OGA pensions and
the introduction of stricter criteria for those entitled, reduction of expenditure for social insurance benefits through
re-examination of the data of beneficiaries,
 Reduction of local government expenditure through reduction of grants (250 mn euros).
Respectively, the new measures from the side of revenues are the following:
 Increase of tax revenues (3,678 mn euros)
 Increase of social contributions of SSFs (259 mn euros)
 Increase of local government revenues (355 mn euros).
From the above, it seems clearly that Greece implements a program of rapid fiscal adjustment in order to create the
conditions for the earliest possible return to international capital markets with the best possible terms.
The objective, in each year of the time period that is covered in the MTP, is that fiscal adjustment should remain
focused on significant structural reforms without putting further burden on socially vulnerable groups.
64
4.
TOTAL REVENUES AND EXPENDITURE OF THE GENERAL GOVERNMENT
The consolidated statement of the general government depicts the consolidated net position of all the sub-sectors of the
general government (State, EBFs, SSFs, LGO’s, hospitals, reclassified SOEs), in broad categories of revenues and
expenditures. An overview of the major categories of revenues and expenditures of the general government before and
after the fiscal interventions on a consolidated basis is presented in table 3.12.
Table 3.12 Consolidated general government deficit (baseline scenario and MTFS)
As % of GDP
2011
Total Revenue
Indirect taxes
Direct taxes
Social contributions
Transfers received
Sales of Goods & Services
Return on assets (incl. interest)
Other revenues
Total Expenditure
Compensation of Employees
Operational expenditure
Social Transfers (other than in kind)
Interest
Other Current Expenditure
Gross Fixed Capital Formation
Other capital expenditure
Unallocated Reserve
General Government Accrual Balance
B.S.
40.9
12.2
7.0
9.5
2.1
1.0
0.6
8.6
51.4
9.5
5.2
24.0
6.5
1.4
3.6
1.1
0.3
-10.4
2012
MTFS
42.2
12.4
6.9
10.5
2.1
1.0
0.6
8.8
49.5
9.1
4.8
23.3
6.5
1.4
3.1
1.1
0.3
-7.3
B.S.
40.5
12.3
6.2
9.6
2.1
1.1
0.6
8.5
52.6
9.0
4.9
24.1
7.8
1.5
3.6
1.1
0.6
-12.0
MTFS
43.5
12.7
7.6
10.6
2.1
1.1
0.6
8.8
49.1
8.2
4.3
22.5
7.6
1.5
3.3
1.1
0.7
-5.6
B.S.
39.5
12.2
6.1
9.2
2.2
0.9
0.6
8.2
52.6
8.5
4.7
23.4
9.2
1.4
3.6
1.3
0.6
-13.1
2013
MTFS
43.2
12.9
7.5
10.5
2.1
1.0
0.6
8.6
47.6
7.5
3.8
21.4
8.4
1.4
3.2
1.2
0.7
-4.4
B.S.
38.5
12.0
6.0
9.3
1.6
0.9
0.6
8.1
52.3
8.1
4.8
22.6
10.6
1.4
3.5
0.8
0.6
-13.8
2014
MTFS
43.4
13.2
7.7
10.9
1.5
1.0
0.6
8.5
45.6
7.0
3.4
20.3
9.1
1.3
3.1
0.7
0.5
-2.2
B.S.
37.7
11.9
5.9
9.2
1.5
0.8
0.6
7.7
52.0
7.8
4.3
21.9
11.8
1.3
3.3
0.9
0.7
-14.4
2015
MTFS
43.2
13.1
7.9
10.9
1.4
0.9
0.6
8.3
43.8
6.6
2.6
19.4
9.3
1.2
2.9
0.9
0.7
-0.6
In mn euros
Total Revenue
Indirect taxes
Direct taxes
Social contributions
Transfers received
Sales of Goods & Services
Return on assets (incl. interest)
Other revenues
Total Expenditure
Compensation of Employees
Operational expenditure
Social Transfers (other than in kind)
Interest
Other Current Expenditure
Gross Fixed Capital Formation
Other capital expenditure
Unallocated Reserve
General Government Accrual Balance
2011
B.S.
MTFS
92,291
95,148
27,469
28,031
15,703
15,541
21,505
23,589
4,783
4,641
2,163
2,163
1,365
1,365
19,304
19,818
115,844
111,507
21,444
20,496
11,626
10,753
54,089
52,514
14,544
14,544
3,110
3,110
8,037
7,095
2,414
2,414
580
580
-23,552
-16,359
2012
B.S.
MTFS
92,606
99,374
28,104
29,102
14,247
17,273
21,992
24,200
4,885
4,746
2,465
2,518
1,419
1,419
19,495
20,117
120,105
112,245
20,459
18,718
11,235
9,866
54,998
51,406
17,856
17,456
3,333
3,333
8,250
7,450
2,513
2,447
1,460
1,570
-27,500
-12,871
2013
B.S.
MTFS
93,013 101,759
28,663
30,406
14,406
17,653
21,759
24,631
5,115
4,976
2,220
2,409
1,424
1,424
19,427
20,260
123,923 112,071
20,054
17,774
10,997
8,889
55,056
50,319
21,705
19,805
3,285
3,284
8,400
7,600
2,967
2,860
1,460
1,540
-30,910 -10,312
2014
B.S.
MTFS
93,525 105,447
29,243
32,033
14,632
18,648
22,583
26,534
3,869
3,639
2,113
2,442
1,519
1,519
19,565
20,631
127,119 110,688
19,782
17,058
11,671
8,379
54,816
49,369
25,754
22,154
3,340
3,169
8,400
7,507
1,851
1,797
1,505
1,255
-33,594
-5,241
B.S.
94,866
29,861
14,917
23,130
3,869
2,026
1,559
19,504
131,046
19,550
10,848
55,212
29,660
3,293
8,400
2,313
1,770
-36,180
2015
MTFS
108,719
33,014
19,806
27,564
3,579
2,371
1,559
20,826
110,243
16,649
6,627
48,865
23,460
3,122
7,389
2,312
1,820
-1,525
GDP (in mn euros)
225,400
228,400
235,500
242,900
251,900
251,900
225,400
228,400
235,500
242,900
*B.S. = Baseline scenario (before measures) MTFS = Medium Term Fiscal Strategy (after measures)
Note : 1) For the 2015 deficit estimate, contingency measures in the magnitude of 1,220 mn euro have not been taken into account,
not be necessary.
2) The aforementioned classification of expenditure and revenues, for analytical and operational reasons, does not follow GFS and
methology.
since they might
ESA95
The consolidation of all sub-sectors in an integrated statement involves the netting-off of a) the trades between the subsectors and b) the intra-sectoral trades within the sub-sectors.
In this sense, all transactions within the general government that constitute expenditure for one sub-sector and an
equivalent revenue for another sub-sector, are cleared. For example, a grant to an extra-budgetary fund from the
65
ordinary budget is expenditure for the state and revenue of an equal amount for the extra-budgetary fund so, the pair of
these transactions must be cleared since it artificially inflates the costs and revenues at the consolidated level.
Accordingly, the consolidated statement of the general government presents the net revenues and the net expenditure,
and thus the real economic activity throughout the general government.
A comparison between the baseline scenario and MTFS targets at the consolidated level shows a significantly different
picture of a gradual reduction of expenditure and increase in revenues for the whole period.
Consolidated General Government and targets for the development of revenues and expenditure
of the General Government
MTFS : General Government Revenues (% GDP)
BASELINE SCENARIO : General Government Revenues (% GDP) without measures
MTFS : General Government Expenditures (% GDP)
BASELINE SCENARIO : General Government Expenditures (% GDP) without measures
55,0%
53,6%
50,9% 51,4%
50,0%
49,5%
47,3%
49,1%
49,5%
46,8%
45,3% 45,1% 44,7% 45,5%
45,0%
47,6%
45,5%
45,6%
44,0%
43,8%
43,5%
40,0%
52,6% 52,6% 52,3% 52,0%
42,2%
40,9% 40,3%
39,0%
38,1% 38,6%
2003
2004
39,4%
40,1% 39,9%
39,8%
40,9%
43,5% 43,2% 43,4% 43,2%
40,5%
39,5%
38,1%
38,5%
37,7%
35,0%
30,0%
2000
2001
2002
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
On the expenditure side, the MTFS attempts, for the first time, not only to reduce the costs of the state but to
rationalize, based on targets, the composition of the general government expenditure.
In the MTFS context, a gradual reduction in total general government expenditure is observed, from 51.4% of the GDP
in 2011 in the baseline scenario to 43.8% of GDP in 2015, showing a reduction of 7.6 percentage points in the period
2011-2015.
66
General Government expenditure per category (2009-2015)
(amounts in bn euro)
140
130
120
110
Other expenditure
100
Gross fixed capital
formation
Interest
90
80
70
60
Social transfers
50
40
30
Operational expenditure
20
Compensation of
employees
10
0
2009
2010
2011
2012
2013
2014
2015
On the revenues side, the projections for the whole period are rather conservative showing a total revenues increase
from 40.9% of GDP in 2011 in the baseline scenario to 43.2% of GDP in 2015 in the MTFS.
General government revenue per category (2009-2015)
(amounts in bn euro)
110
100
90
Other revenue
80
70
Various revenues
60
Social transfers
50
40
Direct taxes
30
20
Indirect taxes
10
0
2009
2010
2011
2012
2013
2014
2015
67
5.
EXPENDITURE AND REVENUES OF THE GENERAL GOVERNMENT PER SECTOR
5.1
State Owned Enterprises (SOEs)
After recent legislation in force since 1/1/2011, the Special Secretariat for State Owned Enterprises (EGDEKO) is
supervising over 150 legal entities (SOEs) with a scope of activities that is extremely diverse, spanning from SOEs
operating in competitive, fully or partially deregulated sectors to SOEs operating to implement government policy
mandates. In 2010, about 20 SOEs have been re-classified by ELSTAT in the General Government, being the
following:
SOCIETY OF INFORMATION, MANAGEMENT ORGANISATION UNIT, ELGA, ΟPΕΚΕPΕ, ΑΤΤΙΚΟ ΜΕΤRΟ,
ΕΟΤ, ΕΤΕRPS, ΤRΑΙΝΟSΕ, ETHEL, I.S.Α.P., ILPAP, EAS, ΟSΕ, ΟSΕ & ΕDΙYΥ, GΑΙΑ ΟSΕ, ΕRGΟSΕ, ΤRΑΜ
SA, ΕRΤ, ELECTROMECHANIKA, ΚΕΕLPΝΟ.
Table 3.13 State Owned Enterprises (SOEs)
2011
BS
REVENUE
Sales
Grants from Ordinary Budget
Grants from PIB
Other revenues
Interest
EXPENDITURE
Staff salaries
Pensions
Payments on behalf of third parties
Other expenditure
Interest expenditure
Investment expenditure
Deficit(-)/Surplus(+) before guarantees called
Deficit(-)/Surplus(+) after guarantees called
Note:
MTFS
BS
2012
MTFS
BS
2013
MTFS
BS
2014
MTFS
BS
2015
MTFS
2,849
2,761
2,276
2,242
2,008
2,119
1,834
2,090
1,672
1,953
900
627
443
876
3
900
627
355
876
3
891
580
400
402
3
891
580
342
427
3
816
555
378
256
3
936
555
320
306
3
665
544
372
250
3
905
544
313
325
3
525
535
365
244
3
765
535
307
344
3
2,846
2,720
2,380
1,895
2,078
1,379
1,959
1,081
1,862
733
982
0
304
575
309
676
946
0
304
573
309
588
806
0
309
392
296
576
537
0
258
354
296
450
670
0
301
325
288
495
307
0
206
249
288
330
668
0
295
289
280
426
261
0
155
165
280
220
669
0
293
258
275
366
171
0
84
108
275
95
3
41
-104
346
-71
740
-124
1,009
-190
1,220
1,211
1,248
1,368
1,818
1,866
2,677
859
1,992
1,385
2,795
B.S. = Baseline scenario (before measures) MTFS = Medium Term Fiscal Strategy (after measures)
The baseline scenario
The baseline scenario already incorporates the benefits from the restructuring plans of OSE and OASA companies
(including their affiliates). These plans which are initiated in 2011 forecast a drastic cut in expenditure relating to the
compensation of employees (through the transfer of the excessive personnel to other general government units and
other measures) as well as the operational expenses.
In the baseline scenario, the reclassified SOEs present a positive balance (surplus) over the whole period 2011-2015.
However, this is mainly due to the fact that their debt obligations (in the form of guarantees called) ranging from 1.52.0 bn euros annually, are covered by the State Budget.
The MTFS interventions:
The target savings for reclassified SOEs under the MTFS of approx. 1,300 mn euros over the period 2012-2015 consist
of increases in revenues and reductions in expenditure, either due to cuts in wages or operating expenses, or from the
merger or closure of SOEs.




Measures targeting at the increase of revenues of OSE, OASA, ERT and other SOEs by 240 mn euros over the
period 2013-2015
Policy measures starting in 2012 aiming at cutting expenditure of SOEs by at least 352 mn euros by 2015
compared to the baseline scenario through the reduction of personnel expenses and other operational expenses.
Savings from restructuring, mergers or closure of SOEs by at least 622 mn euros over the period 2012-2015.
Revenues from the sale of assets associated with non-core activities by at least 100 mn euros over the period 20122015.
68
Action Plan (referring to all SOEs)
The major objective of the Medium-Term Fiscal Strategy 2012-2015 for the re-organization of SOEs is value creation
by enhancing their contribution to the fiscal targets sought after by the overall re-organization programme and
improving their role and impact on the social and economic operating framework.
The methodological process to be followed in order to decide the immediate privatization, restructuring or closing of a
SOE with commercial activity is based on specific criteria with the first being the degree to which a SOE is
undertaking a strategic role in its area of activity. The SOE is then examined in terms of financial health, as well as the
potential to improve if restructured. For SOEs with non-commercial activity, the first criterion addressed is the degree
to which an SOE is performing a public obligation in its area of activity.
The value creation plan involves the following steps:
 Estimation of SOEs value under their current state
 Collection of information for comparative analysis (Benchmarking)
 Analysis of the gap between SOEs and benchmarks performance
 Assessment of the potential from value creation
Considering international best practices as well as the local situation in Greece, it is evident that the main sources of
benefit may derive from commercially driven SOEs. The success of the value creation plan depends on achieving
specific strategic, commercial, human resources, structural and financial capabilities.
The Financial Improvement Targets 2012-2015 in SOEs with commercial activities are functions of:
 revenue growth,
 cost rationalization,
 capital structure,
 business divestitures and,
 asset deployment.
5.2
Local Government
The reforming of the state through the enhancement of decentralization, as well as the re-foundation of first and second
level of local government, is the prerequisite for a modern and effective state. By implementing “Kallikratis”
significant responsibilities of the state have been delegated to the Local Government.
The statistics of “Kallikratis” program are the following:

1,034 OTA (Local Government Organizations) of the first level were merged to only 325 municipalities

76 prefectures and provinces were merged to 13 Regions with elected adminisstration. Furthermore, the 13 former
Regions were limited to 7 Decentralized Administrations.


the nearly 6,000 legal entities of the municipalities were merged to less than 1,500.
the remunerated positions of elected officials were limited to 16,657 from 30,795.

the about 60,000 administrative members of legal entities and enterprises of LGOs were limited to less than
20,000.

the number of organic posts in the new Regions were limited to 30,000.
At the same time, following a policy of the Ministry of the Interior, Decentralization and E-Governance for the
rationalization of recruitment procedures of contract agents by municipalities and prefectures, significant savings were
achieved that already amount to almost the 50% of the number of posts compared to 2009. For the year 2011 the upper
ceiling for those posts is set at 8,458.
In addition, the “Kallikratis” program has established:



the independent auditing of the legality of the decisions taken by the elected Local Government bodies, including
their budget, through the establishment of an Independent Audit Agency for Local Government Organizations.
The accounting control of the financial management of the LGOs, including their legal entities and enterprises.
The obligation to present their revenues, expenditures, balance items, items of equity, assets and liabilities, in a
Central Data Base which offers the possibility to the Ministry of Interior, Decentralization and E-Governance, the
Ministry of Finance, as well as the independent Hellenic Statistical Authority, to have immediate and valid
69
information about their financial items. To ensure having really credible budgets, the process of an obligatory
budget review has been initiated, in case it is detected that the revenues of the first 6 months are lower compared to
initial provisions.
In the framework of ESPA, the Action Plan that supports the Municipalities and Regions aims at enhancing
rationalization and effectiveness of their operation, provision of better services to the citizen, constant evaluation of the
Municipalities and Regions and creation of self government entities with enhanced transparency which create the
necessary conditions to support development.
The baseline scenario
Despite this reform, in the baseline scenario the consolidated local government balance is projected to be negative
(deficit) over the whole period 2011-2015, because of the restructuring process itself as well the stocks of arrears
(approx. 900 mn euros) and debt (approx 2.0 bn euros) that have accumulated before the implementation of
“Kallikratis” program.
Table 3.14 Local Government Balance
2011
BS
MTFS
BS
2012
MTFS
BS
2013
MTFS
BS
2014
MTFS
BS
2015
MTFS
REVENUE
7,359
6,989
7,461
7,611
7,577
8,041
7,574
8,310
7,601
8,475
Social security contributions
Interest
Grants from Ordinary Budget
Grants from PIB
Other revenues
0
30
3,959
700
2,670
0
30
3,659
630
2,670
0
28
4,039
700
2,694
0
28
4,150
634
2,799
0
26
4,132
700
2,720
0
26
4,386
634
2,995
0
24
4,103
700
2,747
0
24
4,450
634
3,202
0
22
4,110
700
2,769
0
22
4,450
634
3,369
EXPENDITURE
7,923
7,361
8,193
7,266
8,279
7,000
8,285
6,629
8,324
6,307
Staff salaries
Pensions
Interest
Investment expenditure
Other expenditure
2,531
0
100
1,382
3,910
2,193
0
100
1,312
3,756
2,875
0
110
1,354
3,854
2,434
0
110
1,288
3,434
2,832
0
110
1,327
4,011
2,271
0
110
1,261
3,357
2,791
0
120
1,301
4,073
2,160
0
120
1,235
3,114
2,754
0
120
1,275
4,175
2,113
0
120
1,209
2,866
-564
-372
-732
345
-702
1,041
-711
1,681
-722
2,169
Deficit(-)/Surplus(+)
Note:
B.S. = Baseline scenario (before measures)
MTFS = Medium Term Fiscal Strategy (after measures)
The MTFS program
The returns to local government will be adjusted based on the updated programme of economic policy (PEP), so that
local governments have balanced budgets.
The target savings for Local Government under the MTFS of approx. 1,500 mn euros mn euros over the period 20122015 consist of increases in revenues and reductions in expenditure:
 Reassessment of LGs spending, aimed at savings of 905 mn euros.
 Measures targeting at the increase of revenues from tolls, fees, rights and other revenue streams due to the
economy of scale for the larger revenue collection systems following the merging of local administrations. The
increase is estimated at 500 mn euros over the period 2012-2015.
 Policy measures aiming at increasing revenues by at least 100 mn euros by 2015 due to the introduction of tax
compliance certificate for local taxes.
5.3
Extra-budgetary Funds (EBFs)
Background on EBFs
According to the Hellenic Statistical Authority (ELSTAT), as of March 2011 there are 311 Public and Private Law
Legal Entities supervised by the Central Government (ie Ministries) in Greece.
In addition to these EBFs, there is a number of other legal entities that currently receive some kind of public funding,
which are classified outside the Central Government.
70
Currently there are at least 3 registers of extra-budgetary entities:
 The GAO’s register, used until 2011, that lists around 5,119 entities
 The Bank of Greece register
 ELSTAT’s register
Although ELSTAT’s register is considered as the official one, ELSTAT is presently working together with Eurostat to
prepare a comprehensive register of all EBFs supervised by ministries, with the first draft expected by mid-June 2011.
Table 3.15 EBFs Balance
2011
BS
REVENUE
Social security contributions
Interest
Grants from ordinary budget
Grants from PIB
Other revenues
EXPENDITURE
Staff salaries
Pensions
Interest
Investment expenditure
Other expenditure
Deficit(-)/Surplus(+)
Note:
MTFS
BS
2012
MTFS
BS
2013
MTFS
BS
2014
MTFS
BS
2015
MTFS
2,014
1,291
1,836
1,596
1,684
1,444
1,589
1,349
1,480
1,240
0
101
737
763
413
0
101
687
90
413
0
86
663
687
400
0
86
613
497
400
0
86
597
618
383
0
86
547
428
383
0
87
537
556
409
0
87
487
366
409
0
87
483
501
409
0
87
433
311
409
1,977
1,015
1,996
1,422
1,954
1,188
1,938
972
1,920
800
588
0
11
793
584
551
0
11
121
333
574
0
12
718
692
515
0
12
528
366
560
0
12
651
731
478
0
12
461
238
546
0
12
590
790
450
0
12
400
110
533
0
12
535
840
434
0
12
345
8
37
275
-160
174
-270
256
-349
378
-440
440
B.S. = Baseline scenario (before measures) MTFS = Medium Term Fiscal Strategy (after measures)
Beyond the EBFs of the general government, the balance of which is presented in table 3.15, there are at least 500
EBFs outside the General Government which receive public funding amounting to 1.7 bn euros in 2010 (from which
679 mn euro from the ordinary budget and 1.01 bn euro from the Public Investment Program). This amount of total
transfers is important, at least compared to the level of State Budget expenditure and in the light of the measures to be
taken for the MTFS.
However, for the MTFS purposes only EBFs i.e. private and public law entities classified inside the General
Government are analysed below.
Baseline scenario
The key measure in the baseline scenario (though it has not been legislated) is a reduction in grants from the Ordinary
State Budget and Earmarked Revenues of 10% annually between 2012-2015, thus reducing EBFs’ revenue by 243 mn
euros. In addition, the amount of PIB grants is expected to fall by 222 mn euros. However, the expenditures of extrabudgetary funds are expected to increase at a much slower pace, leading to deficits in the years of 2012-2015. To
balance their budgets, EBFs’ expenditures need to be cut by further 440 mn euros between 2012-2015.
MTFS Savings Measures from EBFs
The target savings for EBFs under the MTFS consist almost entirely of reductions in expenditures of an amount of 750
mn euro, either due to cuts in wages or operating expenses, or through the merger or closure of entities. It can be
analysed as follows:
An additional reduction in State Budget Transfers to legal entities outside the General Government, is expected to
produce savings of 490 mn euros in 2011.
Action Plan for EBFs
Upon the validation of the unified registry of EBFs and their financial data, a comprehensive assessment of EBFs
inside and outside the General Government will be undertaken which will produce a Plan with concrete actions and
associated administrative initiatives to achieve savings.
71
6.
STATE BUDGET EXPENDITURE PER MINISTRY
6.1
State budget expenditure per ministry-After measures
Ministry of Interior, Decentralization and E-Government
Budget appropriations of the Ministry are estimated to present an increase by 190.73 mn euro in 2015 compared to the
projections for 2011 in the before measures scenario or 4.1% (not including expenditures for elections, not repeated in
2015), mainly due to the fact that earmarked resources transferred to the LGOs are increased. Earmarked resources to
the local government will be adjusted based on the update of the Economic Policy Programme (EPP) targeting at
balanced budgets for the LGOs.
As far as the other expenditure categories of the Ministry are concerned, it is estimated that significant savings will be
achieved, mainly as a result of the effort to decrease expenditures for operational and other expenditures by 96.47 mn
euro or 55.4%, of which 50.95 mn euro or 69.6% concern the reduction of consumption expenditures (movement
allowances, procurements of technical equipment, rents for buildings of the ministry’s agencies and other operational
expenditure).
Ministry of Foreign Affairs
Budget appropriations of the Ministry present a decrease by 53.35 mn euro in 2015 compared to the initial projection
for 2011 in the before measures scenario or 14.9%.
The above saving is estimated to be achieved mainly due to decreasing expenditures for:
 operational and other expenditures by 41.90 mn euro or 21.2%, of which 36.99 mn euro concern reduction of
consumption expenditures (movement allowances by 6.31 mn euro, operational expenditures by 19.09 mn euro,
procurement of technical equipment by 2.34 mn euro) and
 wage bill by 11.45 mn euro or 7.2%.
Ministry of National Defense
Budget appropriations of the Ministry present a decrease by 1,081 mn euro in 2015 compared to the initial projection
for 2011 in the before measures scenario or 22,3%.
The above saving is estimated to be achieved mainly due to decreasing expenditures for:
 expenditures for military equipment programs on a cash basis by 500 mn euro or 33.3%.
 operational and other expenditures by 228.45 mn euro or 24.9%, of which 225.16 mn euro concern reduction of
consumption expenditures, procurement of technical equipment by 83.04 mn euro and operational expenditures by
28.36 mn euro and
 wage bill of the military and civilian staff by 343.5 mn euro or 14.7%.
72
Table 3.16 State budget expenditures per body 2009-2015 – Baseline scenario
(in mn euros)
2011
Estimates
5
5
0
200
198
2
5,405
4,695
710
376
358
18
4,867
3,349
2012
2013
2014
2015
5
5
0
196
194
2
5,192
4,392
800
362
348
14
4,835
3,316
5
5
0
193
191
2
5,215
4,555
660
356
343
13
4,789
3,269
5
5
0
190
188
2
5,291
4,511
780
354
338
16
4,748
3,326
5
5
0
188
186
2
5,405
4,445
960
352
334
18
4,707
3,285
1,600
18
5,817
5,742
75
740
732
8
6,863
6,283
580
647
525
122
1,032
1,018
14
27,048
9,933
15,920
1,196
1,500
18
5,946
5,871
75
683
675
8
6,757
6,177
580
646
524
122
1,016
1,002
14
27,278
9,807
16,002
1,469
1,500
19
5,706
5,631
75
649
642
7
6,684
6,054
570
661
563
98
902
885
17
30,023
11,471
16,900
1,652
1,500
20
5,545
5,470
75
655
649
6
6,664
6,114
610
651
556
95
903
885
18
34,342
11,652
20,500
2,190
1,400
22
5,504
5,419
85
664
657
7
6,630
5,990
640
654
549
105
905
885
20
37,548
11,985
24,400
1,163
1,400
22
5,459
5,369
90
674
666
8
6,455
5,925
530
653
543
110
897
877
20
42,242
12,539
28,000
1,703
2,173
2,148
25
583
583
73,717
52,047
13,223
1,455
1,055
400
644
224
420
14,927
14,322
605
2,118
118
2,000
3,059
839
2,220
1,641
1,551
90
2,022
1,944
78
1,140
1,140
80,339
53,123
15,920
1,455
1,055
400
668
248
420
16,061
15,456
605
2,119
119
2,000
3,121
901
2,220
1,643
1,553
90
2,004
1,926
78
1,140
1,140
81,390
53,919
16,002
1,460
1,005
455
680
245
435
14,125
13,585
540
2,185
115
2,070
2,963
853
2,110
1,494
1,429
65
2,007
1,934
73
1,150
1,150
81,278
52,726
16,900
1,455
1,005
450
687
242
445
15,161
14,651
510
2,264
114
2,150
2,911
823
2,088
1,495
1,425
70
1,984
1,906
78
1,210
1,210
86,484
53,794
20,500
1,567
997
570
510
239
271
14,094
13,644
450
2,312
112
2,200
2,774
814
1,960
1,494
1,421
73
1,960
1,881
79
1,220
1,220
88,424
52,961
24,400
1,712
887
825
405
240
165
14,163
13,863
300
2,661
111
2,550
2,668
808
1,860
1,497
1,417
80
1,937
1,857
80
880
880
92,957
53,354
28,000
1,017
972
8,447
1,600
1,196
8,500
1,500
1,469
8,500
1,500
1,652
8,500
1,500
2,190
8,500
1,400
1,163
8,500
1,400
1,703
8,500
Bodies
2009
2010
1 Presidency of The Hellenic Republic
Ordinary Budget
Public Investment Budget
2 Hellenic Parliament
Ordinary Budget
Public Investment Budget
3 Ministry of Interior, Decentralisation and E-government
Ordinary Budget
Public Investment Budget
4 Ministry of Foreign Affairs
Ordinary Budget
Public Investment Budget
5 Ministry of National Defense
Ordinary Budget
Payments for Ministry of National Defense military Equipment
procurement (Cash Basis)
Public Investment Budget
6 Ministry of Health and Social Solidarity
Ordinary Budget (Without OPAD)
Public Investment Budget
7 Ministry of Justice, Transparency and Human Rights
Ordinary Budget
Public Investment Budget
8 Ministry of Education, Lifelong Learning and Religious Affairs
Ordinary Budget
Public Investment Budget
9 Ministry of Culture and Tourism
Ordinary Budget
Public Investment Budget
10 Ministry of Finance (Without General State Expenditures)
Ordinary Budget
Public Investment Budget
11 General State Expenditures
Ordinary Budget
Interest Expenditure
Guarantees Called
Public Investment Budget
12 Ministry of Rural Development and Food
Ordinary Budget
Public Investment Budget
13 Ministry of Environment, Energy and Climate Change
Ordinary Budget
Public Investment Budget
14 Ministry of Labour and Social Security
Ordinary Budget (Including OPAD)
Public Investment Budget
15 Ministry of Economy, Competitiveness and Shipping
Ordinary Budget
Public Investment Budget
16 Ministry of Infrastructure, Transport and Networks
Ordinary Budget
Public Investment Budget
17 Ministry of Maritime Affairs, Islands and Fishery
Ordinary Budget
Public Investment Budget
18 Ministry of Citizen Protection
Ordinary Budget
Public Investment Budget
19 Decentralised Administrations
Public Investment Budget
TOTAL
Ordinary Budget Primary Expenditures
Interest Expenditure
Payments for Ministry of National Defense military Equipment
procurement (Cash Basis)
Guarantees Called
Public Investment Budget
5
5
0
219
218
1
6,667
5,510
1,157
457
450
7
6,313
4,133
5
5
0
198
198
0
4,291
3,492
799
395
378
17
4,549
3,531
2,175
5
6,267
6,187
80
914
909
5
7,480
7,131
349
978
698
280
1,186
1,178
8
23,667
10,758
12,325
584
1,017
1
6,221
6,204
17
704
701
3
6,988
6,683
305
726
599
127
1,059
1,054
5
23,627
9,432
13,223
972
1,775
1,237
538
652
330
322
16,201
15,935
266
2,514
115
2,399
3,854
769
3,085
1,669
1,669
1,593
1,222
371
626
274
352
14,748
14,054
694
2,762
115
2,647
3,257
755
2,502
1,202
1,202
2,371
2,309
62
1,024
1,024
81,454
59,541
12,325
2,175
584
9,588
2011
Budget
5
5
0
200
198
2
5,633
4,923
710
374
356
18
4,973
3,355
73
Table 3.17 State budget expenditures per body 2009-2015
Including proposed interventions MTFS
(in mn euros)
Bodies
1 Presidency of The Hellenic Republic
Ordinary Budget
Public Investment Budget
2 Hellenic Parliament
Ordinary Budget
Public Investment Budget
3 Ministry of Interior, Decentralisation and E-government
Ordinary Budget
Public Investment Budget
4 Ministry of Foreign Affairs
Ordinary Budget
Public Investment Budget
5 Ministry of National Defense
Ordinary Budget
Payments for Ministry of National Defense military Equipment
procurement (Cash Basis)
Public Investment Budget
6 Ministry of Health and Social Solidarity
Ordinary Budget (Without OPAD)
Public Investment Budget
7 Ministry of Justice, Transparency and Human Rights
Ordinary Budget
Public Investment Budget
8 Ministry of Education, Lifelong Learning and Religious Affairs
Ordinary Budget
Public Investment Budget
9 Ministry of Culture and Tourism
Ordinary Budget
Public Investment Budget
10 Ministry of Finance (Without General State Expenditures)
Ordinary Budget
Public Investment Budget
11 General State Expenditures
Ordinary Budget
Interest Expenditure
Guarantees Called
Public Investment Budget
12 Ministry of Rural Development and Food
Ordinary Budget
Public Investment Budget
13 Ministry of Environment, Energy and Climate Change
Ordinary Budget
Public Investment Budget
14 Ministry of Labour and Social Security
Ordinary Budget (Including OPAD)
Public Investment Budget
15 Ministry of Economy, Competitiveness and Shipping
Ordinary Budget
Public Investment Budget
16 Ministry of Infrastructure, Transport and Networks
Ordinary Budget
Public Investment Budget
17 Ministry of Maritime Affairs, Islands and Fishery
Ordinary Budget
Public Investment Budget
18 Ministry of Citizen Protection
Ordinary Budget
Public Investment Budget
19 Decentralized Administrations
Public Investment Budget
TOTAL
Ordinary Budget Primary Expenditures
Interest Expenditure
Payments for Ministry of National Defense military Equipment
procurement (Cash Basis)
Guarantees Called
Public Investment Budget
2011
Estimates
5
5
0
197
195
2
5,015
4,507
508
358
343
15
4,774
3,257
2012
2013
2014
2015
5
5
0
198
198
0
4,291
3,492
799
395
378
17
4,549
3,531
2011
Budget
5
5
0
200
198
2
5,633
4,923
710
374
356
18
4,973
3,355
5
5
0
189
187
2
5,197
4,588
609
347
331
16
4,725
3,208
5
5
0
184
182
2
5,500
4,891
609
338
322
16
4,634
3,117
5
5
0
179
177
2
5,553
4,944
609
325
309
16
4,057
2,840
5
5
0
174
172
2
5,475
4,866
609
320
304
16
3,785
2,768
2,175
5
6,267
6,187
80
914
909
5
7,480
7,131
349
978
698
280
1,186
1,178
8
23,667
10,758
12,325
584
1,017
1
6,221
6,204
17
704
701
3
6,988
6,683
305
726
599
127
1,059
1,054
5
23,627
9,432
13,223
972
1,600
18
5,817
5,742
75
740
732
8
6,863
6,283
580
647
525
122
1,032
1,018
14
27,048
9,933
15,920
1,196
1,500
17
5,685
5,620
65
674
667
7
6,507
5,986
521
555
443
112
981
968
13
27,008
9,537
16,002
1,469
1,500
17
5,344
5,274
70
616
609
7
6,392
5,841
550
598
481
117
926
913
13
29,556
11,004
16,900
1,652
1,500
17
5,150
5,080
70
607
600
7
6,221
5,671
550
585
468
117
840
827
13
32,965
11,275
19,500
2,190
1,200
17
5,075
5,005
70
598
591
7
6,105
5,554
550
571
453
117
808
795
13
34,621
11,458
22,000
1,163
1,000
17
5,024
4,954
70
606
599
7
6,044
5,494
550
562
444
117
784
771
13
37,415
12,312
23,400
1,703
1,775
1,237
538
652
330
322
16,201
15,935
266
2,514
115
2,399
3,854
769
3,085
1,669
1,669
1,593
1,222
371
626
274
352
14,748
14,054
694
2,762
115
2,647
3,257
755
2,502
1,202
1,202
2,371
2,309
62
1,024
1,024
81,454
59,541
12,325
2,173
2,148
25
583
583
73,717
52,047
13,223
1,455
1,055
400
644
224
420
14,927
14,322
605
2,118
118
2,000
3,059
839
2,220
1,641
1,551
90
2,022
1,944
78
1,140
1,140
80,339
53,123
15,920
1,433
1,043
390
650
237
413
15,947
15,358
589
1,660
110
1,550
2,973
883
2,090
1,622
1,540
82
1,924
1,849
75
1,101
1,101
79,069
52,548
16,002
1,390
994
395
644
228
416
13,925
13,328
597
1,551
105
1,445
3,001
842
2,159
1,398
1,312
86
1,846
1,770
76
1,121
1,121
78,771
51,019
16,900
1,388
993
395
638
222
416
14,954
14,357
597
1,548
103
1,445
2,979
820
2,159
1,389
1,303
86
1,789
1,713
76
1,121
1,121
82,838
51,948
19,500
1,192
797
395
636
220
416
13,949
13,351
597
1,545
99
1,445
2,957
798
2,159
1,383
1,297
86
1,734
1,658
76
1,121
1,121
82,414
50,351
22,000
1,082
687
395
637
220
416
14,171
13,574
597
1,543
98
1,445
2,935
776
2,159
1,379
1,293
86
1,687
1,611
76
1,121
1,121
84,750
50,947
23,400
2,175
584
9,588
1,017
972
8,447
1,600
1,196
8,500
1,500
1,469
7,550
1,500
1,652
7,700
1,500
2,190
7,700
1,200
1,163
7,700
1,000
1,703
7,700
2009
2010
5
5
0
219
218
1
6,667
5,510
1,157
457
450
7
6,313
4,133
74
Table 3.18 State budget expenditures 2011-2015 per body and expense category
Baseline scenario (in mn euros)
Bodies
1
2
3
4
5
6
7
8
9
10
11
Presidency of The Hellenic Republic
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Hellenic Parliament
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Interior, Decentralisation and E-government
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Foreign Affairs
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of National Defense
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures(Including NATO Expenses)
Earmarked Revenues
Payments for Ministry of National Defense military Equipment procurement (Cash Basis)
Public Investment Budget
Ministry of Health and Social Solidarity
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection(without OPAD)
Operational and Other Expenditures
Earmarked Revenues
Subsidies to hospitals for the settlement of part of their past debt
Public Investment Budget
Ministry of Justice, Transparency and Human Rights
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Education, Lifelong Learning and Religious Affairs
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Culture and Tourism
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Finance (Without General State Expenditures)
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
General State Expenditures
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
2011
2012
2013
2014
2015
5
5
4
0
1
0
0
200
198
144
6
49
0
2
5,405
4,695
562
0
174
3,959
710
375
357
160
0
198
0
18
4,867
3,349
2,335
58
957
0
1,500
18
5,945
5,870
3,028
1,917
468
8
450
75
683
675
606
0
53
15
8
6,757
6,177
5,435
44
698
0
580
646
524
234
3
281
7
122
1,016
1,002
800
0
202
5
5
4
0
1
0
0
196
194
140
6
47
0
2
5,192
4,392
173
0
157
4,062
800
361
347
160
0
188
0
14
4,835
3,316
2,311
58
948
0
1,500
19
5,706
5,631
2,957
1,867
448
9
350
75
649
642
573
0
53
16
7
6,684
6,114
5,380
44
690
0
570
661
563
233
3
322
6
98
902
885
751
0
134
5
5
4
0
1
0
0
193
191
138
6
47
0
2
5,215
4,555
172
0
227
4,156
660
355
342
160
0
183
0
13
4,789
3,269
2,280
58
931
0
1,500
20
5,545
5,470
2,895
1,817
448
9
300
75
655
649
580
0
53
17
6
6,664
6,054
5,326
43
684
0
610
651
556
232
3
314
7
95
903
885
751
0
134
5
5
4
0
1
0
0
190
188
136
6
46
0
2
5,291
4,511
171
0
213
4,127
780
354
338
159
0
178
0
16
4,748
3,326
2,254
57
1,015
0
1,400
22
5,504
5,419
2,844
1,817
448
9
300
85
664
657
587
0
53
17
7
6,630
5,990
5,263
42
684
0
640
654
549
232
3
308
7
105
905
885
751
0
134
5
5
4
0
1
0
0
188
186
135
5
45
0
2
5,405
4,445
171
0
139
4,135
960
351
333
159
0
174
0
18
4,707
3,285
2,237
57
991
0
1,400
22
5,459
5,369
2,793
1,817
448
10
300
90
674
666
594
0
53
19
8
6,455
5,925
5,201
41
682
0
530
653
543
232
3
302
7
110
897
877
744
0
134
0
14
27,278
9,807
6,308
247
2,565
0
17
30,023
11,471
6,501
547
2,916
0
18
34,342
11,652
6,723
547
2,869
0
20
37,548
11,985
6,945
547
2,984
0
20
42,242
12,539
7,166
547
3,046
75
Table 3.18 State budget expenditures 2011-2015 per body and expense category
Baseline scenario (in mn euros)
12
13
14
15
16
17
18
19
Bodies
2011
2012
2013
2014
2015
Earmarked Revenues
Reserve
Interest Expenditure
Guarantees Called
Public Investment Budget
Ministry of Rural Development and Food
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Environment, Energy and Climate Change
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Labour and Social Security
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection(including OPAD)
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Economy, Competitiveness and Shipping
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Infrastructure, Transport and Networks
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures(including Airport Fees)
Earmarked Revenues
Public Investment Budget
Ministry of Maritime Affairs, Islands and Fishery
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Citizen Protection
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Decentralised Administrations
Public Investment Budget
Total
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Subsidies to hospitals for the settlement of part of their past debt
Reserve
Interest Expenditure
Payments for Ministry of National Defense military Equipment procurement (Cash Basis)
Guarantees Called
Public Investment Budget
108
580
16,002
1,469
0
1,455
1,055
109
0
878
68
400
668
248
137
0
84
27
420
16,061
15,456
44
14,285
17
1,111
605
2,119
119
60
0
59
0
2,000
3,121
901
222
0
669
10
2,220
1,643
1,553
192
1,219
141
0
90
2,004
1,926
1,641
6
280
0
78
1,140
1,140
81,390
53,919
22,019
17,784
7,773
5,312
450
580
16,002
1,500
1,469
8,500
97
1,410
16,900
1,652
0
1,460
1,005
108
0
896
0
455
680
245
113
0
91
41
435
14,125
13,585
48
12,638
24
874
540
2,185
115
60
0
55
0
2,070
2,963
853
225
0
618
10
2,110
1,494
1,429
199
1,139
91
0
65
2,007
1,934
1,650
6
279
0
73
1,150
1,150
81,278
52,726
21,586
16,308
7,956
5,116
350
1,410
16,900
1,500
1,652
8,500
103
1,410
20,500
2,190
0
1,455
1,005
109
0
897
0
450
687
242
109
0
91
42
445
15,161
14,651
50
13,698
17
886
510
2,264
114
60
0
53
0
2,150
2,911
823
217
0
596
10
2,088
1,495
1,425
191
1,139
95
0
70
1,984
1,906
1,625
6
276
0
78
1,210
1,210
86,483
53,793
21,623
17,316
7,915
5,230
300
1,410
20,500
1,500
2,190
8,500
104
1,405
24,400
1,163
0
1,567
997
109
0
888
0
570
510
239
105
0
91
44
271
14,094
13,644
49
12,688
17
890
450
2,312
112
60
0
52
0
2,200
2,774
814
211
0
593
10
1,960
1,494
1,421
188
1,139
94
0
73
1,960
1,881
1,604
6
271
0
79
1,220
1,220
88,423
52,960
21,674
16,304
8,069
5,208
300
1,405
24,400
1,400
1,163
8,500
110
1,670
28,000
1,703
0
1,712
887
109
0
778
0
825
405
240
101
0
91
48
165
14,163
13,863
49
12,899
20
895
300
2,661
111
60
0
50
0
2,550
2,668
808
205
0
592
11
1,860
1,497
1,417
185
1,139
93
0
80
1,937
1,857
1,585
6
267
0
80
880
880
92,956
53,353
21,730
16,514
7,905
5,235
300
1,670
28,000
1,400
1,703
8,500
76
Ministry of Health and Social Solidarity
Budget appropriations of the Ministry present a very significant decrease by 916.86 mn euro in 2015 compared to the
projections for 2011 in the before measures scenario or 15.6%.
The above saving is estimated to be achieved mainly due to the implementation of the appropriate policies to reduce
expenditures for:
 the wage bill and extra benefits of the staff of hospitals by 494.1 mn euro or 16.9%, of which savings from payment
for salaries are at 364.1 mn euro or 15.5% while extra benefits present a reduction by 130 mn euro or 85.2%,
 subsidies to health organizations and institutions and health and social allowances, in the framework of the overall
review of the system of granting allowances, by 159.34 mn euro or 37.4%,
 expenditures to cover deficits of hospitals by 100 mn euro or 8.3% and
 grants to hospitals to pay part of their arrears and in particular those created during the last quarter of the preceding
year by 150 mn euro or 33.3%.
Ministry of Justice, Transparency and Human Rights
Budget appropriations of the Ministry present a decrease by 76.11mn euro in 2015 compared to the respective estimate
for 2011 in the before measures scenario or by 11.3%.
The development of savings to the amount of the above mentioned expenditure is estimated to be achieved mainly as a
result of the implementation of the appropriate policies for the reduction of expenditures related to:



salaries and other fringe benefits by 73.94 mn euro or 12.2%, of which the savings from payments for salaries
amount to 69.21 mn euro or 13.4%, while for the remaining remuneration benefits, the reduction amounts to 1.35
mn euro or 10.3% and for fringe benefits from abolished off budget accounts the reduction amounts to 3.38 mn
euro or 4.5%,
operating and other expenditures by 5.42 mn euro or 10.2%, with special reference to operating expenditures by
3.62 mn euro or12.7% and
procurement of technical equipment by 1.77 mn euro or 9%.
Ministry of Education, Lifelong Learning and Religion
Budget appropriations of the Ministry have been increased during 2011 by:
 30 mn euro to pay off the procurement of university books,
 36 mn euro to pay off teaching staff due to the abolition of the Organization of Education and
 8 mn euro to pay off mandatory contributions to international organizations.
Training,
For the period 2011-2015, the budget appropriations of the Ministry will mainly cover expenditures for:
o the wage bill of teaching and administrative staff of the schools, universities (AEI-TEI) and regional educational
administrative agencies,
o the unhindered operation of the bodies that receive grants by the ministry,
o the payment of contributions to international organizations, mainly to cover the obligations of the General
Secretariat of Research and Technology and
o the development of research, vocational education and training.
The above saving is estimated to be achieved mainly due to the implementation of the appropriate policies to reduce
expenditures for:



the wage bill and extra benefits of the civilian staff by 541.4 n euro or 10%, of which saving from payment for
salaries is by 528.36 or 10.4 while extra benefits present a reduction by 3.6 mn euro or 6.5%,
operational and other expenditures by 98.74 mn euro or 14.1%, of which 76.01 mn euro concern reduction of
consumption expenditures with a special reference to reducing expenditures for procurement of technical
equipment by 39.74 mn euro or 49.9% and
subsidies, in the framework of the overall review of the system, by 22.44 mn euro or 4.2%.
Ministry of Culture and Tourism
The budget appropriations of the Ministry are estimated to present a significant decrease by 79.59 mn euro or 15.2% in
2015 compared to the respective estimate for 2011 in the before measures scenario.
77
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 Operational and other expenditures by 53.1 mn euro or 18.9%, of which 40.23 mn euro or 17.5% concern
expenditures for subsidies. Further reduction of consumption expenditures is estimated to be achieved in
operational expenditures by 7.72 mn euro or 44.9%.
 Payments of remunerations are estimated to present a decrease by 25.16 mn euro or 11%, while payments for
additional remunerations are estimated to decrease by 1.99 mn euro or 52.1%.
Ministry of Finance
The budget appropriations of the Ministry are estimated to present a decrease by 230.47 mn euro or 23% in 2015
compared to the respective estimate for 2011 in the before measures scenario.
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 expenditures for payment of remunerations which are estimated to present a decrease by 69.96 mn euro or 15.7%,
while expenditures to pay additional remuneration from abolished off budget accounts are estimated to decrease by
53.54 mn euro or 15.5%. Expenditures for other benefits (compensation for overtime work, participation to paid
committees and management boards etc.) are expected to decrease by 3.68 mn euro or 56.6%,
 operational and other expenditures by 103.29 mn euro or 51.1%, of which 94.19 mn euro concern consumption
expenditures with a special reference to the estimated reduction to be achieved in operational expenditures by
30.98 mn euro or 30.1%. Expenditures for subsidies to bodies and contributions to international organizations are
expected to decrease by 8.98 mn euro or 51.1%.
Ministry of Rural Development and Food
The budget appropriations of the Ministry are estimated to present a very significant decrease by 368.28 mn euro or
34.9% in 2015 compared to the respective estimate for 2011 in the before measures scenario, mainly due to the
decrease of agricultural grants by 262.8 mn euro.
It is however, underlined that the actual decrease of the budget appropriations of the Ministry amounts to 37.9 mn euro
or 16.1% if the abolition of the earmarked resource to ELGA (the Farmer’s Insurance Fund) by the law 3889/10 (67.5
mn euro) is taken into account and the above mentioned reduction of agricultural subsides.
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 the wage bill which is expected to decrease by 11.24 mn euro,
 subsidies to other bodies by 7.87 mn euro and
 operational expenditures by 17 mn euro.
Ministry of Environment, Energy and Climate Change
The budget appropriations of the Ministry are estimated to present a decrease by 27.77 mn euro or 11.2% in 2015
compared to the respective estimate for 2011 in the before measures scenario, despite the fact that earmarked resources
to the ETERPS (Special Fund for the Implementation of Regulatory and Urban Plans), present a significant increase by
19.11 mn euro or 70.9%.
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 the wage bill, which is estimated to decrease by 40.18 mn euro or 29.3%,
 operational and other expenditures by 6.70 mn euro or 8%, despite the fact that subsidies to other bodies are
estimated increased by 1.14 mn euro or 3.3%. The most significant savings are expected to be achieved in
operational expenditures by 7.39 mn euro or 27.2%.
Ministry of Labor and Social Security
Earmarked resources of the Ministry in 2015, not including those to AKAGE (Intergenerational Fund for Social
Solidarity), are expected to amount at 1,375 mn euro, presenting a radical increase by 263.93 mn euro or 23.8%,
compared to the respective estimate for 2011 in the before interventions scenario.
Transfers to AKAGE for the same period are expected to amount at 692 mn €, presenting a very significant increase by
117 mn euro or 20.3%.
However, as a result of:
 the planned reforms which change the social insurance system in Greece as a whole, with special reference to the
fight against contribution avoidance, contribution evasion and uninsured employment, as well as the broadening of
78

the base of insured staff and the reduction of unemployment and
the review of the necessity and the redefinition of any transfer from the state budget, to the insurance system as
well,
a significant saving is expected to be achieved in grants to the insurance system in general, amounting at 2,149.37 mn
euro or 15.7%.
Ministry of Economy, Competitiveness and Shipping
The budget appropriations of the Ministry are estimated to present a decrease by 21.44 mn euro or 18% in 2015
compared to the respective estimate for 2011 in the before measures scenario.
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 Subsidies to other bodies, which are expected to present a decrease by 10.49 mn euro or 54.5%.
 Payment of consumption expenditures, which are expected to present a decrease by 6.66 mn euro or 30.4%.
Ministry of Infrastructure, Transports and Networks
The budget appropriations of the Ministry are estimated to present a decrease by 125.41 mn euro or 13.9% in 2015
compared to the respective estimate for 2011 in the before measures scenario.
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 the wage bill, which is expected to present a decrease by 28.58 mn euro or 12.9%, of which 23.51 mn euro concern
salaries and 5.07 mn euro concern other allowances and additional remunerations from abolished off budget
accounts,
 subsidies to public transport bodies and others by 46.18 mn euro or 8.8%,
 operational and other expenditures by 46.34 mn euro or 78.3% and
 procurement of technical and other equipment by 4.14 mn euro or 64.1%.
Ministry of Maritime Affairs, Islands and Fisheries
The budget appropriations of the Ministry for 2011 have been increased by:
 35 mn euro to subsidize marginal routes.
 7 mn euro to pay movement expenditures of the Hellenic Coastguard staff during 2010.
The budget appropriations of the Ministry are estimated to present a decrease by 259.66 mn euro or 16.7% in 2015
compared to the respective estimate for 2011 in the before interventions scenario.
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 grants to NAT (Mariner’s Retirement Fund), due to the rationalization and redefinition of the respective framework,
by 180.0 mn euro or 15.3%,
 the wage bill which is estimated to present an overall decrease by 25.42 mn euro or 13.2%, of which:
-reduction by 18.79 mn euro or 10.7% of the expenditures to pay salaries of the military and civilian staff and
-reduction by 6.62 mn euro or 42.4% of the expenditures to pay additional remuneration benefits,
 movement expenditures of the military staff for duty by 1.13 mn euro or 53.6% and
 operational and other expenditures by 2.49 mn euro or 35.6%.
Ministry of Citizen Protection
The budget appropriations of the Ministry are estimated to present a significant decrease by 315.36 mn euro or 16.4%
in 2015 compared to the respective estimate for 2011 in the before measures scenario.
The above saving is estimated to be achieved mainly as a result of the effort to reduce expenditures for:
 the wage bill, which is expected to present an overall decrease by 259.93 mn euro or 15.8%, of which:
-189.39 mn euro or 12.6% reduction of the expenditures to pay salaries of military, civilian and seasonal staff and
- 70.54 mn euro or 49.2% reduction of the expenditures to pay additional remuneration benefits,
 movement expenditures of the military staff for duty by 11.79 mn euro or 23.3%,
 operational and other expenditures by 13.75 mn euro or 13.4%,
 procurement of technical and other equipment by 20.79 mn euro or 28.6% and
 expenditures to produce new type passports by 8.16 mn euro or 16.8%.
79
General state expenditures
The general expenditures are expected to present a significant increase by 10,136.28 mn euro or 37.1% in 2015
compared with the respective estimate for 2011 in the baseline scenario.
This increase is due to:
 the increase of expenditures for interests by 7,398 mn euro or 46.2%,
 the very significant increase of expenditures for pensions by 878 mn euro or 14%,
 the increased expenditures for social protection by 63 mn euro,
 the increase of transfers to EU by 275 mn euro or 11.7% and
 the increase of the reserve fund by 1,140 mn euro.
Table 3.19 State budget expenditures 2011-2015 per body and expense category
Scenario including proposed interventions MTFS (in mn euros)
Bodies
1
2
3
4
5
6
7
8
Presidency of The Hellenic Republic
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Hellenic Parliament
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Interior, Decentralisation and E-government
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Foreign Affairs
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of National Defense
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures(Including NATO Expenses)
Earmarked Revenues
Payments for Ministry of National Defense military Equipment procurement (Cash Basis)
Public Investment Budget
Ministry of Health and Social Solidarity
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection(without OPAD)
Operational and Other Expenditures
Earmarked Revenues
Subsidies to hospitals for the settlement of part of their past debt
Public Investment Budget
Ministry of Justice, Transparency and Human Rights
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Education, Lifelong Learning and Religious Affairs
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
2011
5
5
4
0
1
0
0
198
196
141
6
49
0
2
5,015
4,507
559
0
138
3,809
508
358
343
157
0
186
0
15
4,774
3,257
2,287
58
913
0
1,500
17
5,685
5,620
2,930
1,917
315
8
450
65
674
667
599
0
53
15
7
6,507
5,986
5,314
44
628
0
2012
5
5
4
0
1
0
0
189
187
134
6
48
0
2
5,197
4,588
167
0
96
4,324
609
347
331
154
0
177
0
16
4,725
3,208
2,237
58
914
0
1,500
17
5,344
5,274
2,743
1,867
305
9
350
70
616
609
542
0
51
16
7
6,392
5,841
5,187
44
610
0
2013
5
5
4
0
1
0
0
185
183
130
6
47
0
2
5,500
4,891
164
0
164
4,562
609
338
322
152
0
171
0
16
4,634
3,117
2,174
58
885
0
1,500
17
5,150
5,080
2,649
1,817
304
9
300
70
607
600
533
0
50
17
7
6,221
5,671
5,065
3
603
0
2014
5
5
4
0
1
0
0
180
178
126
6
47
0
2
5,553
4,944
162
0
157
4,625
609
325
309
149
0
161
0
16
4,057
2,840
2,038
54
748
0
1,200
17
5,075
5,005
2,575
1,817
304
9
300
70
598
591
525
0
48
17
7
6,105
5,554
4,954
2
598
0
2015
5
5
4
0
1
0
0
175
173
122
6
45
0
2
5,475
4,866
162
0
78
4,626
609
320
304
148
0
156
0
16
3,785
2,768
1,991
54
723
0
1,000
17
5,024
4,954
2,523
1,817
303
10
300
70
606
599
532
0
48
19
7
6,044
5,494
4,893
1
599
0
80
Table 3.19 State budget expenditures 2011-2015 per body and expense category
Scenario including proposed interventions MTFS (in mn euros)
Bodies
9
10
11
12
13
14
15
16
17
18
19
Public Investment Budget
Ministry of Culture and Tourism
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Finance (Without General State Expenditures)
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
General State Expenditures
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Reserve
Interest Expenditure
Guarantees Called
Public Investment Budget
Ministry of Rural Development and Food
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Environment, Energy and Climate Change
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Labour and Social Security
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection(including OPAD)
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Economy, Competitiveness and Shipping
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Infrastructure, Transport and Networks
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures(including Airport Fees)
Earmarked Revenues
Public Investment Budget
Ministry of Maritime Affairs, Islands and Fishery
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Ministry of Citizen Protection
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Public Investment Budget
Decentralised Administrations
Public Investment Budget
Total
Ordinary Budget
Salaries & Pension
Grants to Social Security Funds, Medical Care, Social Protection
Operational and Other Expenditures
Earmarked Revenues
Subsidies to hospitals for the settlement of part of their past debt
Reserve
Interest Expenditure
2011
2012
2013
2014
2015
521
555
443
230
3
204
7
112
981
968
781
0
187
0
13
27,008
9,537
6,308
22
2,520
108
580
16,002
1,469
0
1,433
1,043
108
0
868
68
390
650
237
132
0
78
27
413
15,947
15,358
42
14,190
15
1,111
589
1,660
110
59
0
51
0
1,550
2,973
883
218
0
655
10
2,090
1,575
1,493
187
1,169
137
0
82
1,924
1,849
1,578
6
266
0
75
1,101
1,101
79,022
52,501
21,633
17,414
7,262
5,162
450
580
16,002
550
598
481
217
3
254
6
117
926
913
742
0
171
0
13
29,556
11,004
6,501
10
2,876
97
1,520
16,900
1,652
0
1,390
994
102
0
893
0
395
644
228
108
0
81
39
416
13,925
13,328
46
12,140
22
1,120
597
1,551
105
58
0
47
0
1,445
3,001
842
217
0
614
10
2,159
1,398
1,312
185
1,039
88
0
86
1,846
1,770
1,501
6
263
0
76
1,121
1,121
78,771
51,019
20,846
15,172
7,509
5,622
350
1,520
16,900
550
585
468
212
3
246
7
117
840
827
717
0
110
0
13
32,965
11,275
6,723
130
2,829
103
1,490
19,500
2,190
0
1,388
993
100
0
893
0
395
638
222
104
0
78
40
416
14,954
14,357
48
13,077
14
1,219
597
1,548
103
57
0
45
0
1,445
2,979
820
207
0
602
10
2,159
1,389
1,303
179
1,039
85
0
86
1,789
1,713
1,456
6
251
0
76
1,121
1,121
82,838
51,948
20,676
16,137
7,378
5,967
300
1,490
19,500
550
571
453
208
3
237
7
117
808
795
696
0
99
0
13
34,621
11,458
6,945
310
2,944
104
1,155
22,000
1,163
0
1,192
797
98
0
699
0
395
636
220
100
0
77
42
416
13,949
13,351
47
12,011
12
1,281
597
1,545
99
56
0
43
0
1,445
2,957
798
199
0
589
10
2,159
1,383
1,297
170
1,039
88
0
86
1,734
1,658
1,419
6
233
0
76
1,121
1,121
82,415
50,352
20,471
15,247
7,083
6,096
300
1,155
22,000
550
562
444
206
3
228
7
117
784
771
673
0
99
0
13
37,415
12,312
7,166
310
3,006
110
1,720
23,400
1,703
0
1,082
687
98
0
589
0
395
637
220
97
0
77
46
416
14,171
13,574
47
12,136
16
1,375
597
1,543
98
56
0
42
0
1,445
2,935
776
193
0
572
11
2,159
1,379
1,293
167
1,039
87
0
86
1,687
1,611
1,381
6
224
0
76
1,121
1,121
84,750
50,947
20,460
15,370
6,892
6,205
300
1,720
23,400
81
Table 3.19 State budget expenditures 2011-2015 per body and expense category
Scenario including proposed interventions MTFS (in mn euros)
Bodies
Payments for Ministry of National Defense military Equipment procurement (Cash Basis)
Guarantees Called
Public Investment Budget
2011
1,500
1,469
7,550
2012
1,500
1,652
7,700
6.2
Public Investment Budget-Action plan for PIB for the period 2011-2015
6.2.1
Objectives served by the Public Investment Budget
2013
1,500
2,190
7,700
2014
1,200
1,163
7,700
2015
1,000
1,703
7,700
The Public Investment Budget (PIB) finances the development policies of the country and in particular the projects and
initiatives which contribute to the improvement of the private and public national capital; hence it supports
development and modernization of the economy on a long term basis.
In this way, the PIB finances the following important development policies:
1. Infrastructure projects, mainly in the field of transport and environment
2. Actions supporting private investment initiatives and the promotion of entrepreneurship
3. Promotion of knowledge society and human capital development
4. Actions supporting investment programs of Local Administration Authorities (SATA and GREECE programs).
In addition to the above, funding is provided to policies implemented by the line ministries and the regions, for the
maintenance and expansion of their infrastructure (i.e. Ministry of Education, Life Long Learning and Religious
Affairs, Ministry of Health and Social Solidarity etc.).
The objective, already in pursue since the beginning of 2011, is the reform of the PIB’s operating mode. This reform is
based on interventions referring to the improvement of planning, monitoring of implementation and corrective actions,
when needed to optimize its effectiveness.
In order to achieve the government’s development goals in the fields of infrastructure, private investments, human
capital and local administration, as well as to comply with the targets of the Memorandum of Financial and Economic
Policies, fulfilling at the same time the funding needs of the NSRF, the amount of 8.5 bn euros has been committed on
an annual basis for the needs of the Public Investment Budget for the period 2011-2015.
These resources are split to the two sides of the PIB as follows:

The co-financed part for 2011, taking into consideration the MOU’s targets, amounts at 6.2 bn euros, while it is
planned to remain over 6 bn euros for each year until 2013.

The national part of the PIB amounts at 2.3 bn euros for 2011. It covers the needs of the current and the New
Investment Law and of the investment programs of Local Administration, SATA and Greece, the expenditures to
repair damage in infrastructure and financial support to victims of earthquakes, fires and other natural disasters, as
well as other-non co financial- investment expenditures of the ministries and regions.
Since the beginning of 2011, implementation of the co-financed part of the PIB is done with strict programming and
targeting, through the new payment procedure in the framework of the NSRF Central Account, which is kept at the
Bank of Greece, ensuring better control and more reasonable management of the available public resources.
In addition, for the formulation and implementation of 2011 PIB, a series of interventions were imposed, which are
fully in line with the principles of sound financial management and binding, according to budget requirements,
planning at the level of Operational Program and Funding Body.
6.2.2
Monitoring - assessment - actions
82
 The total reform of the Public Investment Program is planned based on the following main components:




Revision of the legal framework of the PIB (current dates since 1952).
Restructuring of PIB through rendering the national subprogram of the PIB a National Development Program.
Planning and monitoring of long-term commitments undertaken by the Programme.
Restructuring of the Directorate of Public Investments – creation of new departments in order to ensure compliance
with the principles of medium-term planning and implementation
 Removal of a number of old projects of the national subprogram of the PIB.
 In addition, the categories of expenditure of the PIB that do not have a direct investment orientation (i.e. grants
addressed to institutions, allowances, VAT, etc.) will be identified.
 A monitoring system of the milestones of the co-financed projects will be enabled.
 The decrease of ineligible expenses of the co-financed projects is pursued continuously and in direct collaboration
with the involved Ministries and other Institutions.
 Establishment of a mechanism halting the creation of outstanding liabilities of the approved projects of the PIB.
6.2.3
Consistency with fiscal capacities
For the period 2011 – 2013, the co-financed part is about 75% of the overall program, with emphasis on the years 2012
and 2013 during which the objectives of the Memorandum are clearly higher. Despite this, the remaining part which is
the national part of the PIB is rather important in terms of supporting development policy priorities of the Greek
Government, which are not eligible for the NSRF (Development instrument orientated mainly to the Lisbon and
Goteborg targets). Moreover, the national part of public investments will actively support the local governance after the
initiation of the Program "Kallikrates”.
With regards to the national part of the program it is noted that the available resources are allocated almost evenly
between: a) Investment laws, which are currently the main policy instrument on entrepreneurship and new investments,
b) programs of the Local Government (SATA, national operational program “GREECE”), and c) expenditure of the
line ministries, which mainly concern supplies and maintenance of existing equipment.
The strategic implementation of the PIB is also reflected in the allocation of funds by ministry and/ or region. In
particular:

Emphasis is given to ministries that monitor - manage Operational Programs. The breakdown by Ministry took
place in collaboration with the distribution of the objectives of the Memorandum to individual targets for each
OP.

The largest amount of funds is directed to the Ministry of Infrastructure, Transport and Networks, which has
greater fiscal demands for such payments both in the eligible, and the non-eligible part of the PIB. Furthermore, it’s
still a Ministry with a remarkable amount of outstanding fiscal liabilities.

Large amount of funds is scheduled to be directed to the Ministry of Economy, Competitiveness and Shipping, in
order to serve the financing needs of the new Investment Act.

In line with the country’s development strategy, an important part of resources is going to be directed to the
Ministry of Interior, Decentralization and E-Government (OP “Administrative Reform”, inter alia, to serve the
"Kallikrates”), as well as the upgrading of human resources of the country through the OPs of the Ministries of
Education, Life long learning and Religion and Labor and Social Security.

Finally, the Decentralized Administrations will receive about 14% of the available resources of the PIB on an
annual basis.
83
Table 3.20 PIB expenditure per body (new structure)
(in mn euros)
Ministry/Body
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Parliament of Greece
Interior,Decentralization and Elec. Government
Finance
Foreign Affairs
National Defence
Economy, Compet. and Shipping
Environment ,energy and climate change
Education, long life learning and religion
Infrastructure, transport and networks
Employment and Social Security
Health, Food and Sports
Agricultural Development and Food
Justice,transparency and human rights
Citizen protection
Culture and tourism
Regional Administration
Marine Affairs,Islands and Fishery
Reserve
Total
(1) : Baseline scenario (before interventions)
(2) : Medium Term Fiscal Strategy (after interventions)
2011
BS(1) MTFS(2)
2
2
710
508
14
13
18
15
18
17
2,000 1,650
420
413
580
521
2,220 2,090
605
589
75
65
400
390
8
7
78
75
122
112
1,140 1,101
90
82
0
0
8,500 7,650
2012
BS
MTFS
2
2
800
609
17
13
14
16
19
17
2,070 1,445
435
416
570
550
2,110 2,159
540
597
75
70
455
395
7
7
73
76
98
117
1,150 1,121
65
86
0
0
8,500 7,700
2013
BS
MTFS
2
2
660
609
18
13
13
16
20
17
2,150 1,445
445
416
610
550
2,088 2,159
510
597
75
70
450
395
6
7
78
76
95
117
1,210 1,121
70
86
0
0
8,500 7,700
7.
STATE BUDGET EXPENDITURE PER MAJOR CATEGORY
7.1
State budget expenditure per category-Baseline scenario
2014
BS
MTFS
2
2
780
609
20
13
16
16
22
17
2,200 1,445
271
416
640
550
1,960 2,159
450
597
85
70
570
395
7
7
79
76
105
117
1,220 1,121
73
86
0
0
8,500 7,700
2015
BS
MTFS
2
2
960
609
20
13
18
16
22
17
2,550 1,445
165
416
530
550
1,860 2,159
300
597
90
70
825
395
8
7
80
76
110
117
880 1,121
80
86
0
0
8,500 7,700
Total state budget expenditures, including expenditures for interest payments, military equipment programs of the
Ministry of National Defense and state guarantees which are expected to be called are projected to 72,889 mn euro or
32.3% of GDP in 2011, 72,777 mn euro or 31.9% of GDP in 2012, 77,983 mn euro or 33.1% of GDP in 2013, 79,923
mn euro or 32.9% of GDP in 2014 and 84,456 mn euro or 33.5% of GDP in 2015.
Primary state budget expenditures are projected to 53,468 mn euro or 23.7% of GDP in 2011, 52,375 mn euro or 22.9%
of GDP in 2012, 53,493 mn euro or 22.7% of GDP in 2013, 52,660 mn euro or 21.7% of GDP in 2014 and 53,053 mn
euro or 21.1% of GDP in 2015.
To achieve those results, it has been taken into account:



the rationalization of the wage bill through the optimization of the allocation of human resources and the limitation
of new hiring to the minimum necessary for the proper functioning of the agencies,
the limitation of additional remuneration benefits, such as compensation for overtime work, participation in
committees and management boards, night shift and work beyond 5 days per week,
the downsizing of operational type expenditures and in particular movement allowances, rationalization of the
procurements of public agencies, rents for buildings, telecommunication and other public utility services fees,
public relations as well as any kind of grants.
7.1.1
Salaries, pensions and other remuneration benefits
Expenditures for salaries are projected to 14,296 mn euro or 6.3% of GDP in 2011, 13,671 mn euro or 6.0% of GDP in
2012, 13,492 mn euro or 5.7% of GDP in 2013, 13,331 mn euro or 5.5% of GDP in 2014 and 13,173 mn euro or 5.2%
of GDP in 2015.
Savings in the above categories are expected to be achieved as a result of the implementation of the rule of 1:5 hiring to
retirement ratio.
84
Expenditures for pensions are projected to 6,258 mn euro in 2011, 6,471 mn euro in 2012, 6,693 mn euro in 2013,
6,915 mn euro in 2014 and 7,136 mn euro in 2015, maintained steadily at 2.8% of GDP, for the period 2011-2015.
Expenditures for additional remuneration benefits are projected to 1,415 mn euro in 2011, 1,413 mn euro in 2012,
1,407 mn euro in 2013, 1,397 mn euro in 2014 and 1,390 mn euro in 2015, maintained steadily at 0.6% of GDP for the
period 2011-2015.
Expenditures for new recruitment are estimated to 50 mn euro for the year 2011 and to 30 mn euro for the years 20122015, considering that retirements will reach 15,000 retirees for 2011 and 20,000 for the years 2012-2015.
7.1.2
Social Security, Medical Care and Social Protection
The expenditures of the category are expected to amount at 17,784 mn euro or 7.9% of GDP in 2011, at 16,308 mn
euro or 7.1% of GDP in 2012, at 17,316 mn euro or 7.4% of GDP in 2013, at 16,304 mn euro or 6.7%of GDP in 2014
and at 16,514 or 6.6% of GDP in 2015.
The expenditures to finance hospital deficities are expected to amount at 1,200 mn euro in 2011, at 1,150 mn euro in
2012 and at 1,100 mn euro for the years 2013 up to 2015.
Additionally, to pay the above related obligations of the last quarter of each precuding year which will not be paid due
to the end of the fiscal year, appropriations of 450 mn euro have been projected for 2011, 350 mn euro for 2012 and
300 mn euro annually for the years 2013, 2014 and 2015.
7.1.3
Grants, operational and other consumption expenditure
These expenditures are projected to 7,773 mn euro or 3.4% of GDP in 2011, 7,956 mn euro or 3.5% of GDP in 2012,
7,915 mn euro or 3.4% of GDP in 2013, 8,069 mn euro or 3.3% of GDP in 2014 and 7,905 mn euro or 3.1% of GDP in
2015.
In particular:
Consumption expenditures are expected to decrease by 8.3% or 205 mn euro in 2012 compared to 2011 and for the
period 2013 to 2015 they are expected to be at 0.9% of GDP for the first two years and 0.8% for 2015.
Grants to bodies are expected to increase by 117 mn euro in 2012 compared to 2011 and for the period 2013 to 2015
they are expected to be at 0.9% of GDP for 2013 and 0.8% of GDP for 2014 and 2015.
Expenditures for transfers to the European Union are expected to significantly increase by 11.7% or 275 mn euro for
the period 2011 to 2015 while, on an annual basis, they are expected to amount to 2,355 mn euro in 2011, 2,560 mn
euro in 2012, 2,510 mn euro in 2013, 2,570 mn euro in 2014 and 2,630 mn euro in 2015.
7.1.4
Reserve fund and other non allocated expenditures
To cover emergency expenditures, the amount of 580 mn euro has been budgeted for 2011, 1,410 mn euro annually for
the years 2012 and 2013, 1,405 mn euro for 2014 and 1,670 mn euro for 2015.
Additionally, to cover any extra emergencies, which cannot be specified at the moment, the amount of 50 mn euro has
been budgeted per year for 2012 and 2013 and 100 mn euro annually for 2014 και 2015.
7.1.5
Interest expenditures
Expenditures for interest payments on a cash basis are projected to 16,002 mn euro or 7.1% of GDP in 2011, 16,900
mn euro or 7.4% of GDP in 2012, 20,500 or 8.7% of GDP in 2013, 24,400 mn euro or 10% of GDP in 2014 and 28,000
mn euro or 11.1% of GDP in 2015, increasing at a pace of 5.6%, 21.3%, 19% and 14.8% respectively per year.
7.1.6
Expenditures for military equipment programs of the Ministry of National Defense
Expenditures for military equipment programs of the Ministry of National Defense on a cash basis are projected to
1,500 mn euro or 0.7% of GDP in 2011, 1,500 mn euro or 0.7% of GDP in 2012, 1,500 mn euro or 0.6% of GDP in
2013, 1,400 mn euro or 0.6% of GDP in 2014 and 1,400 mn euro or 0.6% of GDP in 2015.
85
Table 3.21 Ordinary budget expenditure by category baseline scenario
(in mn euros)
s/n
Expenditure categories
Α' Salaries & Pensions (1+2)
1 Wages - Salaries & Other allowances
- Wages
- Salaries
- Other allowances
2 New recruitment
Β' Grants to Social Security Funds, Medical Care, Social Protection
(3+4+5+6)
3 Medical care
4 Grants to Social Security Funds
-Insurance Fund for the Agricultural Sector
-Wage Earner's Fund
-Grant to Manpower Employment Agency (OAED)
-Mariner’s Pension Fund
-Insurance Fund of the Self Employed
-Insurance Fund for the personnel working in Telecommunications
Organization (TAP-OTE)
-Social Funding
-National Organization for Primary Healthcare (EOPYY)
-Public Servants Healthcare Organisation (ΟPAD)
-Other Social Security Funds
-Other Social Security Funds Expenditure
-Payment in exchange of claims of Insurance Fund for the personnel
working in the Public Electricity Company (ΟΑP-DΕΗ)
-Complementary Pension Allowance (EKAS - except retired from Public
Sector)
5 Other Healthcare Expenses (Cover of Hospitals Deficit)
6 Social Protection
-Allowances to families with many children
-Grant to Intergenerational Solidarity Fund (AKAGE)
-Other Social Protection Income Support
C' Operational and Other Expenditures (7+8+9+10)
7 Grants to other Entities
- Public Transport Agencies
-Other Grants
-Grant to the National Statistical Authority (ELSTAT) for population census
8 Consumption Expenditure
- Transportation Allowances
- Operational Expenses
- Rents for former Olympic Airways planes
- Procurement
-Other Expenditure
-ΝΑΤΟ Expenses (From Special Revenues)
9 Conditional Expenditure
-Payments to EU
-Agricultural Subsidies
10 Non Allocated Expenses
-New programmes and other expenditure
- Other expenditure financed by incorporated off-budget accounts
- Electoral expenses
D'. Earmarked Revenues
E' Reserve
I. Ordinary Budget total Primary Expenditure (A+B+C+D+E)
II. Subsidies to hospitals for the settlement of part of their past debt
III. Interest Expenditure
IV. Total Ordinary Budget Expenditure before amortisation (I+II+III)
Payments for Ministry of National Defense military Equipment
V.
procurement
VΙ. Guarantees Called, of which
to bodies classified inside the General Government
to bodies classified outside the General Government
Total Ordinary Budget Expenditure, before participation in Share
VΙΙ.
Capital increases (IV+V+VI)
2011
Budget
2011
2012
2013
2014
2015
Estimates Projections Projections Projections Projections
21,592
21,542
13,873
6,258
1,412
50
22,018
21,968
14,296
6,258
1,415
50
21,585
21,555
13,671
6,471
1,413
30
21,622
21,592
13,492
6,693
1,407
30
21,673
21,643
13,331
6,915
1,397
30
21,729
21,699
13,173
7,136
1,390
30
16,652
61
13,790
4,600
2,310
500
1,200
800
17,784
61
14,928
4,600
2,910
1,064
1,180
800
16,308
61
13,202
3,654
2,303
500
1,100
800
17,316
61
14,250
3,615
2,870
1,000
1,100
800
16,304
61
13,229
3,529
2,444
500
1,100
800
16,514
60
13,427
3,580
2,544
500
1,100
801
600
400
0
1,250
29
561
600
400
0
1,120
28
691
600
400
1,370
870
34
120
600
400
1,391
890
34
100
600
400
1,432
890
34
100
600
400
1,478
890
34
100
600
600
600
600
600
600
940
1,200
1,601
675
606
320
7,870
2,213
446
1,719
48
2,292
327
865
40
671
348
40
3,222
2,487
735
143
94
29
20
5,978
580
52,672
450
15,920
69,042
935
1,200
1,595
700
575
320
7,773
2,059
446
1,565
48
2,485
321
870
40
687
528
40
3,110
2,355
755
119
72
27
20
5,312
580
53,468
450
16,002
69,920
850
1,150
1,895
700
575
620
7,956
2,176
432
1,744
0
2,280
314
873
0
653
405
35
3,333
2,560
773
167
139
28
0
5,116
1,410
52,375
350
16,900
69,625
850
1,100
1,905
700
586
619
7,915
2,150
411
1,739
0
2,243
310
861
0
643
394
35
3,285
2,510
775
236
138
28
71
5,230
1,410
53,493
300
20,500
74,293
800
1,100
1,915
700
597
618
8,069
2,136
411
1,725
0
2,204
302
849
0
634
383
35
3,340
2,570
770
390
286
28
76
5,208
1,405
52,660
300
24,400
77,360
800
1,100
1,927
700
610
617
7,905
2,126
411
1,715
0
2,173
296
838
0
619
384
35
3,293
2,630
663
313
285
28
0
5,235
1,670
53,053
300
28,000
81,353
1,600
1,196
1,051
145
1,500
1,469
1,245
224
1,500
1,652
1,518
134
1,500
2,190
1,979
211
1,400
1,163
1,024
139
1,400
1,703
1,636
67
71,838
72,889
72,777
77,983
79,923
84,456
86
Table 3.22 Ordinary budget expenditure by category (with interventions)
(in mn euros)
s/n
Expenditure categories
Α' Salaries & Pensions (1+2)
1 Wages - Salaries & Other allowances
- Wages
- Salaries
- Other allowances
2 New recruitment
Β' Grants to Social Security Funds, Medical Care, Social Protection
(4+5+6+7)
3 Medical care
4 Grants to Social Security Funds
-Insurance Fund for the Agricultural Sector
-Wage Earner's Fund
-Grant to Manpower Employment Agency (OAED)
-Seamen's Pension Fund
-Insurance Fund of the Self Employed
-Insurance Fund for the personnel working in Telecommunications
Organization (TAP-OTE)
-Social Funding
-National Organization for Primary Healthcare (EOPYY)
-Public Servants Healthcare Organisation (ΟPAD)
-Other Social Security Funds
-Other Social Security Funds Expenditure
-Payment in exchange of claims of Insurance Fund for the personnel
working in the Public Electricity Company (ΟΑP-DΕΗ)
-Complementary Pension Allowance (EKAS - except retired from Public
Sector)
5 Other Healthcare Expenses (Cover of Hospitals Deficit)
6 Social Protection
-Allowances to families with many children
-Grant to Intergenerational Solidarity Fund (AKAGE)
-Other Social Protection Income Support
C' Operational and Other Expenditures (8+9+10+11)
7 Grants to other Entities
- Public Transport Agencies
-Other Grants
-Grant to the National Statistical Authority (ELSTAT) for population census
8 Consumption Expenditure
- Transportation Allowances
- Operational Expenses
- Rents for former Olympic Airways planes
- Procurement
-Other Expenditure
-ΝΑΤΟ Expenses (From Special Revenues)
9 Conditional Expenditure
-Payments to EU
-Agricultural Subsidies
10 Non Allocated Expenses
-New programmes and other expenditure
- Other expenditure financed by incorporated off-budget accounts
- Electoral expenses
D' Earmarked Revenues
E' Reserve
I. Ordinary Budget total Primary Expenditure (A+B+C+D+E)
II. Subsidies to hospitals for the settlement of part of their past debt
III. Interest Expenditure
IV. Total Ordinary Budget Expenditure before amortisation (I+II+III)
V. Payments for Ministry of National Defense military Equipment
procurement
VΙ. Guarantees Called, of which
to bodies classified inside the General Government
to bodies classified outside the General Government
VΙΙ. Total Ordinary Expenditure, before participation in Share Capital
increases (IV+V+VI)
2011
2011
2012
2013
2014
2015
Budget Estimates Projections Projections Projections Projections
a
a
b
c
d
e
21,592
21,632
20,846
20,675
20,470
20,460
21,542
21,582
20,816
20,645
20,440
20,430
13,873
13,997
13,164
12,793
12,390
12,175
6,258
6,258
6,471
6,693
6,915
7,136
1,412
1,328
1,180
1,160
1,135
1,118
50
50
30
30
30
30
16,652
61
13,790
4,600
2,310
500
1,200
800
17,414
61
14,783
4,600
2,910
1,064
1,130
800
15,172
61
12,551
3,360
2,303
500
1,000
800
16,137
61
13,467
3,223
2,870
1,000
1,000
800
15,247
58
12,379
3,070
2,444
500
1,000
800
15,370
57
12,482
3,026
2,544
500
1,000
801
600
400
0
1,250
29
561
550
400
0
1,120
28
691
550
337
1,370
870
26
120
550
337
1,391
890
26
100
550
337
1,432
890
26
100
550
337
1,478
890
26
100
600
600
600
600
600
600
940
1,200
1,601
675
606
320
7,870
2,213
446
1,719
48
2,292
327
865
40
671
348
40
3,222
2,487
735
143
93
29
20
5,978
580
52,672
450
15,920
69,042
890
1,200
1,370
700
575
95
7,261
1,715
446
1,221
48
2,318
303
783
40
650
503
40
3,110
2,355
755
117
70
27
20
5,162
580
52,049
450
16,002
68,502
715
1,150
1,410
700
627
83
7,509
1,863
445
1,418
0
2,148
302
784
0
615
413
35
3,333
2,560
773
165
137
28
0
5,622
1,520
50,668
350
16,900
67,919
680
1,100
1,510
700
648
162
7,377
1,848
436
1,412
0
2,011
297
754
0
579
346
35
3,284
2,510
774
235
136
28
71
5,967
1,490
51,647
300
19,500
71,447
630
1,100
1,711
700
670
341
7,081
1,821
426
1,395
0
1,808
190
699
0
539
345
35
3,169
2,570
599
284
180
28
76
6,096
1,155
50,050
300
22,000
72,350
630
1,100
1,732
700
692
340
6,891
1,794
411
1,383
0
1,769
184
685
0
518
347
35
3,122
2,630
492
207
179
28
0
6,205
1,720
50,646
300
23,400
74,346
1,600
1,196
1,051
145
1,500
1,469
1,245
224
1,500
1,652
1,518
134
1,500
2,190
1,979
211
1,200
1,163
1,024
139
1,000
1,703
1,636
67
71,838
71,471
71,071
75,137
74,713
77,049
87
7.2
State budget expenditures per category – after interventions
Total state budget expenditures, including interest payments, military procurement programs of the Ministry of
National Defense and guarantees which are expected to be called, are projected to 71,417 mn euro or 31.7% of GDP in
2011, 71,071 euro or 31.1% of GDP in 2012, 75,137 mn euro or 31.9% of GDP in 2013, 74,713 mn euro or 30.8% of
GDP in 2014 and 77,049 mn euro or 30.6% of GDP in 2015.
Overall ordinary budget expenditures in 2015 present an increase by 4,159.9 mn euro compared to the respective
estimate for 2011 in the baseline scenario, This is due to:
 the significant increase of expenditures for pensions during the 5 year period by 878 mn euro,
 the increase of transfers to the EU by 275 mn euro,
 the very significant increase of earmarked resources by 892.4 mn euro, as a result of the expected increase of
budget revenues,
 the increase of expenditures for guarantees called by 234 mn euro and
 the radical increase of expenditures for interest payments by 7,398 mn euro in the same period,
 the increase of expenditure for social protection by 136.8 mn euro and
 the increase of the reserve fund by 1,140 mn euro.
It is underlined that these increases cover reductions of other ordinary budget expenditure categories by 6,656.8 mn
euro.
Primary ordinary budget expenditures are projected to 52,049 mn euro or 23,1% of GDP in 2011, 50,668 mn euro or
22,2% of GDP in 2012, 51,647 mn euro or 21,9% of GDP in 2013, 50,050 mn euro or 20,6% of GDP in 2014 and
50,646 mn euro or 20.1% of GDP in 2015. Primary expenditures present a decrease by -2,822 n euro in 2015 compared
to the respective estimate for 2011 in the baseline scenario. If, in this comparison, the aforementioned increase of
transfers to the EU by 275 mn euro of payments for pensions by 878 mn euro in the five year period and of earmarked
recources by 892 uro are not taken into account, then the decrease will be of 4,868 mn euro.
It should be underlined that this expenditure planning is oriented to wiping out, within 2011, arrears of all ordinary
budget bodies, as well as to limiting payables at the lowest possible level.
To achieve those results, it has been taken into account the implementation of a series of interventions aiming at:
 the reduction of the wage bill through the introduction of the new remuneration scale for the public sector, the
increase of working hours, the reduction of the number of contract agents and the introduction of further limitations
to new hiring,
 the rationalization of the overall cost of other fringe benefits on top of the baseline scenario, such as compensation
for overtime work, participation in committees and management boards, compensation for night shift and work
beyond 5 days per week,
 the rationalization of healthcare and medical treatment expenditures,
 the decrease of military expenditures,
 the systematic review and decrease of appropriations for grants, earmarked resources and transfers from the state
budget in general, addressed to any kind of bodies and legal entities whether included in the general government or
not,
 the downsizing of operational type expenditures on top of the baseline scenario and in particular:
 Movement allowances,
 Rents for buildings,
 Procurement of technical equipment, consumables and replacement parts,
 Telecommunication fees for fixed and mobile networks, electricity and water supply, etc,
 Public relations, publications, etc.
Furthermore, in a more analytical approach to the above expenditures per major category, the following remarks are
made:
7.2.1
Salaries, pensions and other fringe benefits
 Expenditures for salaries present a decrease by 2,121 mn euro in 2015 compared to the estimate for 2011 in the
baseline scenario, In particular, they are projected to 13,997 mn euro or 6.21% of GDP in 2011, 13,164 mn euro or
5.76% of GDP in 2012, 12,793 mn euro or 5.43% of GDP in 2013, 12,390 mn euro or 5.1% of GDP in 2014 and
88
12,175 mn euro or 4.8% of GDP in 2015.
Savings in the above are expected to be achieved as a result of the implementation of the following interventions:
 increase of the working hours from 37.5 to 40 hours per week,
 reduction of fixed term contract agents by 50% in 2011 and by 10% annually for the years 2012 to 2015,
 slowing down the maturity pace of the wages of public servants,
 abolition of vacant posts and review of managerial posts,
 review of the number of new admissions to the productive schools of the Ministry of National Defense and the
Ministry of Citizen Protection,
 introduction of flexible types of employment in the public sector and of the possibility for unpaid leaves upon
request of the personnel to work in the private sector.
o
Expenditures for pensions are increased by 878 mn euro in 2015 compared to the respective estimate for 2011 in
the baseline scenario. In particular, they are projected to 6,258 mn euro in 2011, 6,471 mn euro in 2012, 6,693 mn
euro in 2013, 6,915 mn euro in 2014 and 7,136 mn euro in 2015, maintained steadily at 2.8% of GDP, for the
period 2011-2015.
o
Expenditures for additional remuneration benefits are estimated to be reduced by 296 mn euro in 2015 in
comparison to the respective estimate for 2011 in the baseline scenario. In particular, in 2011 they are estimated at
1,328 mn, 1,180 in 2012, 1,160 in 2013, 1,135 in 2014 and 1,118 mn in 2015, i.e. 0.6% of GDP in 2011, 0.5% for
the years 2012, 2013 and 2014 and 0.4% of GDP in 2015.
Savings in expenditures of this category are expected to stem from reductions in additional compensations for:




participation in remunerated committees and management boards,
overtime work, night work and work on Sundays and public holidays, as well as work beyond the 5-days week,
additional remuneration, allowances and bonus schemes from abolished special accounts according to Law
3697/2008 and
any other additional fringe benefits.
7.2.2
Insurance, healthcare and social protection
These expenditures are expected to be reduced by 2,414 mn euro in 2015 in comparison to the 2011 expenditure before
interventions, despite the fact that expenditure for social protection is increasing by 137 mn euro by 2015 compared to
the 2011 projection in the before interventions scenario, mainly due to the expected increase in funding of AKAGE
(Intergenerational Fund for Social Solidarity) by 117 mn euro and increased expenditure for other income benefits by
20 mn euro during the same period.
In particular, these expenditures are expected to reach 17,414 mn euro or 7.7% of GDP in 2011, 15,172 mn or 6.6% of
GDP in 2012, 16,137 mn or 6.9% of GDP in 2013, 15,247 mn or 6.3% of GDP in 2014 and 15,370 mn or 6.1% of GDP
in 2015.
More specifically:


Grants to social security funds are estimated to be reduced by 2,446 mn euro by 2015 in comparison to the 2011
projected expenditure before measures, mainly due to the lower than projected by 180 mn grant to NAT, to Wage
Earners Fund (IKA) by 366 mn euro and to Employment Agency (OAED) BY 564 mn euro.
Transfers to hospitals to cover their deficits are expected to be reduced by 100 mn euro by 2015 in comparison to
the 2011 expenditure before measures.
It is underlined that significant savings in healthcare expenditures are expected through the introduction of a central
procurement system in hospitals.
7.2.3
Grants, operational and other consumption expenditure
These expenditures are expected to be reduced by 882 mn euro by 2015 in comparison to the 2011 projection before
interventions, despite the fact that transfers to the EU are estimated to increase by 275 mn euro.
89
In particular, these expenditures are expected to reach 7,261mn euro or 3.2% of GDP in 2011, 7,509 mn or 3.3% of
GDP in 2012, 7,377 mn or 3.1% of GDP in 2013, 7,081 mn or 2.9% of GDP in 2014 and 6,891 or 2.7% of GDP in
2015.
More specifically:
 Consumption expenditures which consist the most important index for the effectiveness of the effort to restrict
expenditure, are expected to be reduced by 716 mn euro by 2015 in comparison to the 2011 expenditures before
measures or by -28.8%.
Savings in expenditures of this category are expected to stem from reductions in:
- movement of personnel for duty (inland and abroad) due to the modification of the legal provisions governing
conditions for payment of compensation per km and additional overnight compensation,
- rents for the housing of services and renegotiation of all rents with the building owners aiming at reducing the
rents at least by 5% per year or by 20% for the whole period. Furthermore, where conditions are proper,
relocation of services has been scheduled to other state owned buildings, as well as co-location of different
services,
- procurements of capital goods and other intermediary consumption material through the creation of centralized
mechanisms for the implementation of the relevant procurements per Ministry and preparation of programs for
reducing procurement cost by a steady percentage every year,
- telecommunications and postal fees by accelerating the services’ integration in the “Syzefxis” network, through
contracts with fixed and mobile telephony providers with more favorable financial terms and postal fees
reduction,
- expenditure for electricity, water supply, heating, through usage rationalization and connection to gas where
this is possible,
- supply of replacement parts, maintenance material and other equipment,
- supply of paper, stationery, newspapers and magazines.
On top of the above, significant savings are expected to derive from planned mergers of services and entities with
actions such as:
-
new educational map of the country, with mergers of schools, universities, technological educational institutes,
etc.,
re-evaluation of their mandates and mergers of institutions with overlapping responsibilities and institutions
which underperform.
These actions will result in savings in expenditure categories such as remunerations, building rentals, operating
expenses, procurements and grants.
 Expenditure for grants to institutions is estimated to be reduced by 265 mn euro in 2015 compared to the respective
estimate for 2011 before interventions or -12.9%.
Savings in expenditure of this category are expected to result from the implementation of policies to reduce
expenditure for:
- payment of optional contributions to national and international political, financial, etc, organizations and
renegotiation of the level of the obligatory ones,
- subsidies to marginal routes through the introduction of the “transport equivalent” and other policies and
- non-conditional NATO expenditure.
Furthermore:
- decreasing, after reviewing, where appropriate, the subsidies to Public Law Entities (PLEs), other entities,
Non-Governmental Organizations and generally, organizations supervised by state budget bodies,
- decreasing transfers to any kind of entities which receive grants from the state budget.
 The appropriations of 1,200 mn euro in 2011, 1,150 mn euro in 2012 and 1,100 mn euro annually for the years
2013, 2014 and 2015, which were projected to cover the deficit of the hospitals remain unchanged. It is estimated
that they will be decreased by 100 mn euro in 2015 compared to the respective estimate for 2011 before
interventions.
 Also remain unchanged the appropriations which are estimated to be required for the payment of the above
obligations of the last quarter of each preceding year which will not be paid in time due to the end of the fiscal year,
amounting at 450 mn euro in 2011, 350 mn euro in 2012 and 300 mn euro annually for the years 2013, 2014 and
90
2015. They are decreased by 150 mn euro in 2015 compared to the respective estimate for 2011 before measures.
7.2.4
Earmarked spending
These expenditures are increased by 892 mn euro or 16.8% in 2015 compared to the respective estimate for 2011
before measures.
In particular:
 earmarked resources to LGOs are expected to increase by 675 mn euro or 17.2%,
 earmarked resources to Social Security Organizations are expected to significantly increase by 245 mn euro or
20.3% and
 earmarked resources to the other PLES are expected to decrease by 28.0 mn euro or 19.6%.
7.2.5
Reserve fund and other non-allocated expenditure
Appropriations budgeted to cover unforeseen expenditures are estimated to increase by 1,140 mn euro in 2015
compared to 2011 in the before interventions scenario. In particular, they are expected to amount at 580 mn euro in
2011 or 0.8% of the overall expenditure, 1.520 mn euro for 2012, 1,490 mn euro for 2013, 1,155 mn euro in 2014 and
1,720 mn euro in 2015, maintained at the level of 2% approximately of the overall budget expenditure.
7.2.6
Interest expenditure
Expenditures for interest payment, without taking into account privatizations, present a radical increase by 7,398 mn
euro or 46.2% in 2015 compared to the respective estimate for 2011 before interventions.
It is estimated that they will reach 16,002 mn euro or 7.1% of GDP in 2011, 16,900 mn euro or 7.4% of GDP in 2012,
19,500 mn euro or 8.3% of GDP in 2013, 22,000 mn euro or 9.1% of GDP in 2014 and 23,400 mn euro or 9.3% of
GDP in 2015, presenting an annual growth rate of 5.6%, 15.4%, 12.8% and 6.4% respectively.
7.2.7
Expenditures for the military procurement programs of the Ministry of National Defense
The expenditures, on a cash basis, for military procurement programs implemented by the Ministry of National
Defense, present a significant decrease by 500 mn euro in 2015 compared to the respective estimate for 2011 before
measures, or -33.3%.
It is estimated that they will amount to 1,500 mn euro or 0.7% of GDP in 2011, 1,500 mn euro or 0.7% of GDP in
2012, 1,500 mn euro or 0.6% of GDP in 2013, 1,200 mn euro or 0.5% of GDP in 2014 and 1,000 mn euro or 0.4% of
GDP in 2015.
7.2.8
Expenditure for guarantees called
Expenditures for guarantees called on behalf of bodies both in and out of the general government present a significant
increase by 234 mn euro in 2015 compared to the respective estimate for 2011 before measures, or 15.9%.
It is estimated that they will amount to 1,469 mn euro or 0.7% of GDP in 2011, 1,652 mn euro or 0.7% of GDP in
2012, 2,190 mn euro or 0.9% of GDP in 2013, 1,163 mn euro or 0.5% of GDP in 2014 and 1,703 mn euro or 0.7% of
GDP in 2015.
7.3
Transfers from the state budget to general government bodies
Appropriations of this category concern grants and earmarked expenditure of the ordinary budget to general
government bodies (local government, social security funds, hospitals and PLEs).
Projections for earmarked expenditure to the above bodies for the period 2011-2015 are defined in relation to the
projections for ordinary budget revenue and the macroeconomic assumptions, as well as measures of fiscal adjustment
with implementation that covers the same period.
91
Table 3.23 Transfers from the state budget to general government bodies
Expenditure category
1. Transfers to Local Government
2009
Payments
4,913
a. Grants
2011
Estimates
4,008
2012
Projections
4,039
2013
Projections
4,132
2014
Projections
4,104
2015
Projections
4,120
143
77
48
4,770
4,839
3,960
4,039
4,132
4,104
4,120
2. Transfers to Social Security Funds
17,639
14,766
14,498
16,687
17,765
16,710
16,928
a. Grants
11,842
10,054
10,094
12,602
13,650
12,629
12,827
758
604
600
600
600
600
600
1,886
1,682
1,784
1,501
1,530
1,547
1,566
b. Earmarked
b. ΟΑP-DEI
c. Earmarked
d. Three-party funding
390
412
400
400
400
400
400
1,034
914
940
850
850
800
800
f. Other grants
409
8
6
34
34
34
34
g. Grants for benefits to families with many children
790
792
675
700
700
700
700
h. Funding with special bonds
531
300
0
0
0
0
0
1,515
1,047
1,731
1,500
1,400
1,400
1,400
72
675
1,281
1,150
1,100
1,100
1,100
e. EKAS
3. Transfers to hospitals
a. Grants
b. Grants to pay off past liabilities
1,444
372
450
350
300
300
300
4.Transfers to general government legal entities
3,291
3,143
3,038
2,312
2,290
2,279
2,274
a. Grants
2,893
2,885
2,564
1,744
1,739
1,725
1,715
b. Earmarked
258
113
144
136
140
144
149
c. Grants to public transport bodies
140
145
330
432
411
411
411
27,359
23,871
23,275
24,538
25,587
24,493
24,722
Total transfers
8.
2010
Payments
4,916
SOCIAL BUDGET
The social budget consists of three main categories:



Social security funds (ΟΚΑ),
Social protection organizations (OAED, ΟΕΕ, ΟΕΚ),
Hospitals
These three categories of bodies form the subsector of the Social Security Funds of the General Government, according
to the ESA 95 Methodology. This subsector is, in figures, the largest General Government subsector.
The size of this subsector per se, as well as inherent structural weaknesses and rigidities that had been accumulating for
decades, resulted not only in the non-sustainability of the social security system, but also in the unfair redistributive
character of the provision of social security and protection to different social groups.
The Government considered the need to intervene in the social insurance system of primary significance, and for this
reason three laws were prepared and voted (Laws 3762/09, 3863/10 and 3883/10,) for the reform of the system. These
laws, which consist a revolution for the social insurance system, ensure on the one hand to a large extent the
sustainability of the insurance system itself and on the other hand they correct many distortions and inequities by
adopting targeted measures and policies to reduce undeclared work, settle social insurance contributions due, correct
retirement age etc.
These measures have already started yielding from 2010 onwards, some are expected to be yielding even for the next
40 years. Given that some of these measures are already legislated, they are included as actions in the baseline scenario
of the Medium Term Fiscal Strategy and there has been effort to conclude to the best possible realistic quantification
per year.
For the period 2011-2015, the Ministry of Labour and Social Security has already planned a second group of measures
of 10.3 bn euro, which aim at the rationalization of the expenditure as well as at safeguarding that revenue will be
collected.
92
This second group of interventions ensures the sustainability of the social security system of our country, creating at
the same time a modern and fair system.
Today, uninsured employment in our country is at around 26% when in other European countries it amounts to only
3%. In addition, collectability of social contributions versus certified contributions, based on the declarations of the
insured and the companies, fluctuates for OAEE at 65%, for OGA at 64% and for IKA at 87%, which is not only due to
the current difficult economic situation, but also to weaknesses of the monitoring and collection system of the Social
Security Funds.
The interventions are mainly of institutional character and aim at specific actions which will modernize the
mechanisms of control of social transfers to beneficiaries, the provision of financial statistics and the creation of
motives to reduce uninsured work to the benefit of the employees and the insurance system in general.
The choice of these measures by the Ministry of Labour and Social Security was made with a view to protect sensitive
social groups (families with many children, disabled people, low pension beneficiaries etc) who, under the current
difficult economic conditions, experience more intensively the economic crisis.
The main interventions are:
1. Full implementation as of 01/01/2012 of the measure regarding the unified way of payment of salaries and
contributions through the banking system.
2. Establishment and function of a unified control mechanism at the Ministry of Labour and Social Security to
conduct targeted controls under the supervision of the responsible Inspector General.
3. Implementation of the insurance of special employment categories – ergosimo i.e. establishment of an employment
voucher to introduce legal employment in housekeeping staff, workers of the primary sector and those who do not
work on a regular basis.
4. Implementation of the new settlement and of the new measure providing for obligatory collection of due amounts,
as well as imposition of high fines and penalties in cases of violation of the provisions of the insurance legislation.
5. Introduction of the employment card with a targeted implementation to companies of increased delinquency in
matters of undeclared employment.
6. Extension of the Integrated Information System of IKA (IIS) and strengthening of all information systems of the
Funds.
7. Transfer of supervision of all Social Insurance bodies as of 01/01/2012 to the Ministry of Labour and Social
Security (NAT, Funds supervised by the Ministry of Finance, the Ministry of Defense etc.).
8. Introduction of a solidarity source for the insured of OAEE.
9. Readjustment of the unemployment contribution for employees and companies of the private sector, as well as
introduction of a contribution to be paid by the employees in the public sector and the broader public sector in
order to support the unemployed.
These measures come additionally to a series of targeted actions that are already taken to comfort sensitive groups:








the program of subsidies to support employers’ contributions by 75% in order to safeguard existing workplaces,
support of the unemployment benefits,
creation of motives to hire unemployed people,
social security of the unemployed regarding health and hospital care till end of February 2012,
reduction from 80 to 50 of the minimum number of coupons required from the insured with IKA in order to be
entitled to health and hospital care (for 2010),
programs of subsidizing employers’ contributions from 50% to 100% for maintenance of jobs with an expected
number of 350,000 beneficiaries,
programs of subsidizing contributions especially for hiring young people, from 25% to 100%, with an expected
number of 20,000 beneficiaries,
programs of subsidizing contributions up to 100% for unemployed in the category of disabled persons, with an
expected number of 2,800 beneficiaries.
There are also programs ongoing or starting in the 3rd quarter of the current year regarding the following:
 a program of social work for approximately 55,000 unemployed with a priority to young people and people in the
age group above 55 years,
 local programs of targeted action for enhancing employment, with an expected number of 15,000 more
beneficiaries,
93
 programs of subsidizing contributions with participation of OAED and the enterprises in cases of dismissals for
20,000 persons in the age group above 55 years
 Program of subsidizing employment for new scientists up to 35 years in order to help them enter the labor market,
with an expected number of 5,000 beneficiaries per year from the 3rd quarter of 2011 onwards and
 program of converting the unemployment benefit into employment benefit by facilitating access of the unemployed
in the labor market.
94
The table 3.24 presents the Social Budget before and after the interventions for the period 2011-2015
Table 3.24 Social budget
2011
B.S
MTFS
B.S
2012
MTFS
B.S
2013
MTFS
B.S
2014
MTFS
B.S
2015
MTFS
I. Social security funds
a) IKA, OGA, etc.
Revenue
46,735
46,852 45,774 45,988 46,899 47,782 47,442 49,454 48,175 50,687
Contributions
Settlement from amnesty
Transfer from AKAGE
Social sources
Grants from state budget +earmarked revenue
Return on assets
Other
19,324
1,150
100
1,329
14,442
2,392
7,999
19,586 19,229 19,838 19,366 20,689 19,898 22,360 20,368 23,334
1,150 1,300 1,300 1,340 1,340 1,440 1,440 1,440 1,440
100
150
150
200
200
200
200
0
0
1,329 1,814 1,814 2,114 2,114 2,264 2,264 2,335 2,335
14,297 12,758 12,363 13,305 12,864 12,789 12,338 12,994 12,539
2,392 2,457 2,457 2,477 2,477 2,597 2,597 2,677 2,677
7,999 8,067 8,067 8,098 8,098 8,255 8,255 8,361 8,361
Expenditure
45,263
43,928 45,368 42,292 45,622 41,213 45,559 40,183 45,742 39,431
Pension benefits
Main pension
Auxiliary pension
Pharmaceutical
Illness benefits
Provision benefits
Earmarked payments
Other
Personnel cost
Administrative expenses
Transfers to hospitals
25,585
21,175
4,410
3,693
3,031
3,130
7,233
242
945
54
1,350
25,080 26,104 24,808 26,414 24,618 26,534 24,248 26,685 23,999
20,720 21,635 20,699 21,945 20,709 22,065 20,539 22,216 20,390
4,360 4,469 4,109 4,469 3,909 4,469 3,709 4,469 3,609
3,443 3,593 2,850 3,700 2,757 3,800 2,757 4,000 2,857
3,031 2,911 2,841 2,911 2,841 2,911 2,841 2,911 2,741
2,705 3,130 2,404 3,030 1,779 2,880 1,329 2,770
919
7,233 7,271 7,271 7,327 7,327 7,384 7,384 7,435 7,435
242
175
170
175
157
175
137
175
109
795
880
647
860
532
820
435
810
417
50
54
51
55
52
55
52
56
53
1,350 1,250 1,250 1,150 1,150 1,000 1,000
900
900
Balance (a)
1,473
2,924
406
3,696
1,277
6,569
1,883
9,271
2,432 11,256
Revenue
4,318
4,318
3,445
3,445
3,471
3,471
3,287
3,287
3,390
3,390
Contributions
Grants from state budget
Return on assets
Other
2,565
1,527
37
189
2,565
1,527
37
189
2,475
750
30
190
2,475
750
30
190
2,150
1,100
30
191
2,150
1,100
30
191
2,464
600
30
193
2,464
600
30
193
2,564
600
30
196
2,564
600
30
196
Expenditure
4,481
4,311
4,522
4,297
3,980
3,742
3,381
3,123
3,260
2,974
Benefits
Fronted benefits
Personnel cost
Other
3,864
180
217
220
3,694
180
217
220
3,921
181
210
210
3,701
181
210
205
3,385
181
204
210
3,165
181
204
192
2,797
181
198
205
2,577
181
198
167
2,682
181
192
205
2,462
181
192
139
7 -1,077
-852
-509
-271
-94
164
130
416
b) OAED, OEE, OEK
Balance (b)
(a)+(b) balance=SSF balance
-163
1,310
2,931
-671
2,845
768
6,298
1,789
9,435
2,562 11,672
Revenue
Transfers from SSF
Transfers from state budget
Own revenue
Earmarked revenue
3,000
1,350
1,650
3,020
1,350
1,650
20
2,750
1,250
1,500
2,790
1,250
1,500
40
2,550
1,150
1,400
2,600
1,150
1,400
50
2,400
1,000
1,400
2,465
1,000
1,400
65
2,300
900
1,400
2,440
900
1,400
140
Expenditure
3,523
3,523
2,710
2,596
2,680
2,427
2,650
2,209
2,620
1,991
Pharmaceuticals & other material
Other
3,051
472
3,051
472
2,360
350
2,246
350
2,320
360
2,067
360
2,310
340
1,869
340
2,300
320
1,671
320
Balance (ΙΙ)
-523
-503
40
194
-130
173
-250
256
-320
449
Total balance (Ι+ΙΙ)
787
2,428
-631
3,039
638
6,471
1,539
9,691
II. Hospitals
Note:
2,242 12,121
B.S. = Baseline scenario (before interventions)
MTFS = Medium Term Fiscal Strategy (after interventions)
95
With the proposed interventions, revenues in the social security funds category increase by 2.5 bn € in 2015, which is a
result of a rise in social contributions by 2.97 bn and a decrease in grants from the state budget and earmarked revenue
by 450 mn euro.
Total expenditure of social security funds is reduced by 6.3 bn in 2015 as a result of the interventions scheduled for the
period 2011-15. More specifically, the expenditure for pensions (main and auxiliary) is reduced by 2.7 bn in 2015,
while approximately 1.1 bn is the saving from pharmaceutical expenditure, 1.8 bn is estimated to be saved from
provision benefits and almost 200 mio from illness benefits. There is also a saving expected from personnel cost by 340
mn euro.
In the category of social protection organizations a reduction by 220 mn is forecast for benefits in 2015 and
approximately by 70 mn from the other expenditure.
In the health sector a significant saving is expected from pharmaceutical and other expenditure of this kind of about
630 mn in 2015.
As far as the health system is concerned, the evolution of its figures in the baseline scenario (without any new
interventions) shows a non-viable system based on its current organization and operation, since it only leads to new
larger, year by year, deficits. Therefore it was considered as crucial and urgent to promote a radical reform in the health
sector capable of reversing the unfavorable circumstances, from the view of services provided to the citizens, as well as
from the inefficient overspending in such a sensitive sector. The Ministry of Health and Social Solidarity scheduled a
series of actions, in order to rationalize the expenditure of the hospitals in every level.
The Ministry of Health will introduce a diagnosis related model for hospital financing in 2012, in order to enhance
efficiency and transparency in the NHS system. At the same time quantitative and qualitative indicators are adopted
(partly in 2011), medical acts are reevaluated and medical records are created per patient (electronic archives). These
interventions aim at the reduction of the total volume of supplies in hospitals, creating a sound competitive
environment among hospitals.
According to the recently introduced health map, mergers of hospitals are scheduled, as well as the second phase of
hospitals’ computerization, in order to achieve economies of scale for the whole health system and to reduce
operational and administrative expenditure. Furthermore, this option will lead to the best utilization of beds capacity
reducing their operating cost.
The centralization of the supplies system for the health system is promoted aiming at the achievement of lower prices
per item, through the optimum utilization of the purchase power, the enhancement and expansion of prices observatory
and the establishment of single product specifications and technical requirements.
Another target is the reduction of the treatment cost for non-insured people, through the restriction of their admission to
specified hospital units, which will reduce the relevant cost. The policy will start yielding in 2012.
An international office of cooperation will be established and international agreements will be signed for the
hospitalization of patients from other countries, mainly European Union citizens. This action could be combined with
developments in the so called “medical tourism” mainly in touristic areas of the country and the ones near the frontiers
(with Bulgaria, Albania, Turkey and FYROM).
The National Organization for Primary Healthcare (EOPYY) starts operating in September 2011 with single regulation
for benefits, standard contracts that will contribute to rationalization of respective expenditure. The target is to
significantly reduce pharmaceutical expenditure (diagnostic examinations, hospitals, etc.).
The above is pursued by the Medium Term Fiscal Strategy 2012-2015 and the Hellenic Parliament is asked to approve
and vote for it.
96